1

GROUP 2
Sr. No. NAME ROLL NO. SIGNATURE

2 4 3 5 6 8

5 16 18 20 23

INDEX SR. NO. TOPIC 1 INTRODUCTION - ORIGIN OF A COMPANY -OBJECTIVES - FEATURES 2 TYPES OF COMPANIES 3 PRIVATE COMPANY 4 PUBLIC COMPANY 5 MEMORANDUM OF ASSOCIATION 6 ARTICLES OF ASSOCIATION 7 DOCTRINE OF ULTRAVIRES 8 DOCTRINE OF CONSTRUCTIVE NOTICE 9 DOCTRINE OF INDOOR MANAGEMENT 10 PROSPECTUS 11 MEETINGS 12 DIRECTORS 13 EXHIBIT - FORM NO.1 14 EXHIBIT - FORM NO.1A 15 EXHIBIT - FORM NO.1AB 17 EXHIBIT -FORM NO.1B 18 EXHIBIT -FORM NO.2A 19 EXHIBIT -FORM NO.5 20 EXHIBIT -FORM NO.7B 21 EXHIBIT -FORM NO.7BB 22 EXHIBIT -FORM NO.17 23 EXHIBIT -FORM NO.18 24 EXHIBIT -FORM NO.23 25 EXHIBIT -FORM NO.23AA 26 EXHIBIT -FORM NO.23AB 27 EXHIBIT -FORM NO.32 28 EXHIBIT -FORM NO.34AA 29 EXHIBIT -FORM NO.37 30 EXHIBIT -FORM NO.40 31 EXHIBIT -FORM NO.41 32 EXHIBIT -FORM NO.60 PAGE NOS. 9 12 23 24 28 31 32 36 37 39 41 42 48 49 51 52 54 57 59 62 65 67 68 70 71 73 75 78 79 81 83

MFM - I 2010 -2013

TABLE OF CASES SR. NO. 1 2 3 4 CASE LAW ASHBURY RAILWAY CARRIAGE CO. VS V RICHE DERRY V/S PEEK NARESH KUMAR AGARWAL & ANOTHER V/S DAVENDER KUMAR MITTAL & ANOTHER SALOMON V A SALOMON & CO. LTD PAGE NO. 34 40 22 11

INTRODUCTION: Origin of company related legislation in India: Company related legislation in India owes its origin to English company laws. The first law regulating companies in India was the Joint Stock Companies Act, 1850. This was based on English Companies Act, 1844. Concept of separate legal entity was incorporated in this act, although the principle of limited liability was not introduced. In 1857, this act introduced for the first time in India the concept of limited liability for banking companies also. Companies Act, 1866 ---- this mainly dealt with incorporation and winding up of trading companies and other associations. Companies Consolidation Act, 1882 ---- this act repeated the companies act, 1866. Indian Companys Act, 1913 ----- passed with the objective of consolidating & amending laws related to trading companies and other associations, many amendments made in this act. WW II --- this resulted in changes in management and organisation of joint stock companies. The Govt of India formed a committee under the chairmanship of Dr.H.J. Bhabha in 1950
---- to makes suggestion on company law reform. Committee submitted its report in March 1952. On basis of this report Companies Act 1956 came into force from April 1956.

There are still a number of loopholes and defects in this act --- amendments have been made from time to time as per Amendments Act, 1960. OBJECTIVES: 1) Provide simple and inexpensive mechanism for formation of company 2) Make liability of members limited to face value of shares subscribed, no personal liability of members (as in case of partnership ) 3) Consolidate and amend laws related to companies and other associations 4) Encourage investment 5) Ensure proper administration of company 6) Arrange for investigation into transactions of company
7) Prevent malpractices

8) DEFINITIONS OF COMPANY: 8

 Section 3(1)(i) of the Companies Act 1956 defines a company as : A company formed and registered under the Act or an existing company. A voluntary incorporated association which is an artificial person created by law with limited liability having a common seal and perpetual succession. Section 566 of the Companies Act 1956 defines a joint stock company as : a company having a permanent paid-up or nominal share capital of fixed amount divided into shares also of fixed amount or held and transferable as stock or dividend and held partly in one way and partly in the other.

FEATURE OF A COMPANY: Compulsory Registration under Companies Act 1956 Separate Legal Entity : Solomon v/s Solomon Limited Liability: Liability of a company is never limited. Liability of members is limited. Free Transferability of Shares Perpetual Succession: Separate property and seal Is not a citizen and has no fundamental rights under the constitution Has no nationality and a domicile Can sue and can be sued, can enter into contracts. Has a common seal which gives it an independent existence Artificial legal person --- enjoys almost all the rights and is subject to all the obligations of a natural person Company is not an agent or trustee of member, on the other hand a member may act as agent or trustee or employee of company

CASE LAW Salomon v A Salomon & Co Ltd

Mr Aron Salomon was a leather boot and shoe manufacturer. His sons wanted to be partners, so he turned his business into a limited company. His wife and five eldest children became subscribers and two eldest sons also directors. Mr Salomon took 20,001 of the company's 40,000 shares. But soon after Mr Salomon incorporated his business, there was economic trouble. The company was put into liquidation. The court ruled that: The company is at law a different person altogether from the subscribers to the Memorandum, and though it may be that after incorporation of the business is precisely the same as it was before and the same persons and managers, and the same hands receive the profits, the company is not in law the agent of the subscribers or trustees for them. Nor are the subscribers or members liable in any shape or form except to the extent and in the manner provided by the act.

PARTNERSHIP V/S COMPANY: 1) Definition: Partnership is relation between persons who have agreed to share profits of business carried by all or anyone of them acting for all. Company is voluntary incorporated association which is an artificial person created by law with limited liability having common seal and perpetual succession.

2) Governing Act: Partnership is governed by the Indian Partnership Act 1932 10

Company is governed by the Indian Companies Act 1956

3) Registration: Partnership -- Registration is not compulsory Company -- Registration is compulsory

4) Membership: Partnership: Minimum 2 persons are required. For banking business membership is ten persons and for trading business it is 20 persons. Company: In case of private co. minimum 2 & max. 50 can form a pvt. ltd co., while minimum 7 and maximum unlimited to constitute a public ltd. co.

5) Existence: Partnership: Has no perpetual succession Company: Has perpetual succession

6) Transferability of Shares: Partnership: Restricts the right to transfer its shares without consent of all partners Company: Free Transferability of Shares, subject to conditions

7) Property: Partnership: Property of the firm is the property of the partners Company: Property belongs only to the company and not the shareholders

8) Agency: Partnership: Every partner is an agent of the other partners Company: A shareholder is not an agent of the co. or the other shareholders 11

9) Contract: Partnership: A partner cannot contract with the firm Company: A shareholder can contract with the company

10)

Management:

Partnership: Management lies in hands of partner except sleeping/dormant partner Company: Management lies in hands of board of directors who are elected by shareholders

11)

Creditors:

Partnership: Creditors of firm are also creditors of partners Company: Creditors of company are only of company and not of members.

12)

Audit of Accounts:

Partnership: Accounts need not be audited by auditor Company: Accounts need to audited by auditor

13)

Documents:

Partnership: Partnership Deed defines objectives and scope of firm Company: Memorandum and Articles of Association defines objectives and scope of company and its day to day functioning

ON THE BASIS OF INCORPORATION CHARTERED COMPANIES / ROYAL CHARTERED COMPANY

12

A company which came into being by the grant of royal chartered issued by the king or queen are referred to as chartered companies or Royal Companies. These companies are regulated by the chartered concern. Eg:- The East India Co, The Chartered bank of Australia, Bank of England. STATUTORY COMPANIES Company which came into existence by special act passed by the legislator of a country or a state is referred to as statutory company. Such companies enjoy power of rights, privileges as laid down in the Act Eg:- RBI, SBI, LIC, The industrial finance Corporation. REGISTERED COMPANIES Registered companies are those which are incorporated with the registrar of the companies under the provision of prevailing companys act. The companies are governed by the provisions of companies Act 1956. Most of the companies in India are registered Company under Companys Act 1956.

ON THE BASIS OF LIABILITY THE LIABILITY OF THE REGISTERED COMPANY MAY BE LIMITED OR UNLIMITED. 1. COMPANIES WITH AN UNLIMITED LIABILITY: S/12 A Company not having any limit on the liability of its member is called an Unlimited Company or A Company with unlimited liability.

In the event of the winding up of the company the members are liable To contribute in the proportion of their share in the company a specified amount necessary to discharge in full the debts & liabilities of the company.

However, the members are not liable to the companys creditors as the company being a separate legal entity from the persons who constitute it is liable to its creditor.

13

An unlimited company may or may not have a share capital.

If it has a share capital the article must state the amount of share capital with which company is to be registered.

An unlimited company with the share capital may be either public company or a private company.

2. COMPANY WITH LIMITED LIABILITY.

A company having a limit on the liability of its members is called Limited Company or A Company with limited liability. A limited company may be either.

a. A Company limited by shares:

i. A company limited by shares may be public company or private company

ii. It is a registered company having the liability of its members limited

by its Memorandum of Association. iii. Such company also known as share company. iv. The amount remaining unpaid on the shares can be called up at any time either during the life time of company or at the time of winding up of the company. v. However a shareholder cannot be called upon for the payment of the liabilities of the company.

b. A Company limited by guarantee:

14

i. The liability of members of Guarantee company is limited by a stipulated amount mentioned in memorandum. ii. The guaranteed amount can be called up by the company from the members only at the time of winding up, if the liability of the company exceeds to its assets. iii. A company limited by guarantee may or may not have a share capital. iv. A company limited by guarantee having a share capital may be public company or a private company.

c. A company limited by shares as well as by guarantee:

i. It has both the elements of the guarantee company as well as the share company. ii. Such a company raises its initial capital from its members, while the normal working funds are provided from other sources such as fees, charges, subscription etc. iii. Every member of such a company is subject to two-fold liability i.e to guarantee which may become effective either during the lifetime of the company or at the time of winding up. [C] ON THE BASIS OF GENERAL INTEREST OF THE PUBLIC:
1. Private companies : S/3(i) (iii)

A private company is a company which by its articles. a) Prohibits any invitation to the public to subscribe to any of its shares or debentures. b) Prohibits the right to transfer its shares. c) Limits the no. of its members to 50 excluding its employees member or past employee member. 2. Public companies : S/3(i) (iv) States that all companies other than private company are called public company 3. Government company : S/617 15

(i) S/617 of companies act defines the government company as a company in which not less than 51% of the paid up share capital is held by the central government or by any state government or government or partly held by the central government & partly by one or more state government / governments & includes co. which is a subsidiary of a government company. (ii) Just as any other company, government company, are governed by the provisions of the company act but by virtue of S/620, the central government may direct that any of the provisions of the act shall not apply to them or shall apply on with such exceptions, modifications & adoptions & may be notified by the government. (iii) However, the central governments cannot exempt the government a company from the provisions of which specifically deals with such company. (iv) S/619 according to this section, the auditor of a government company shall be appointed or re-appointed by the central government on the advice of the controller and auditor general of India. (v) S/619(a) according to this section, the central government must place before both the houses of parliament an annual report on the working & affairs of each government company & such a report to be prepared within 3 months of its annual general meeting, together with a copy of the audit report & any comments upon or supplement to such a audit report made by the controller & auditor general of India. 4. Foreign company : (i) A company incorporated outside India is a foreign company. (ii) Companies are placed into 2 categories namely: (a) Company incorporated outside India & which establish place of business in India after 1st April 1956 & (b) Company incorporated outside India & which established place of st business in India before 1 April 1956 & continues to have it in India. (iii) According to companies amendment act 1974 if not less than 51% after paid up share capital of a company incorporated outside India & having established a place of business in India, is held by one or more citizens of India or by one or more Indian bodies corporate, then such company shall comply with such of the provisions of the act as may be prescribed with regard to the business carried on by it in India. (iv) The company act of 1956 requires that every foreign company which established a place of business in India after 1st April 1956, must within 30 days of the establishment of such a place of business, filed with the registrar of the company at New Delhi & also with the registrar of the company of the state in which such a place of business is established. (a) A certified copy of memorandum & article of the company. (b) The full address of the registered office of the company. (c) A list of the directors of the company & its secretary, with full particulars of their nationality, address & business or occupation. 16

(d) The names & address of someone or more persons residing in India, who are authorized to accept service of process or notices or other documents to be served on the company & (e) The address of the principle place of business in India. (f) Where a foreign company which has been carrying on business in India, ceases to carry on such business in India, it may be wound up as an unregistered company not withstanding the fact that the company has been dissolved or ceased to exist under the laws of the country in which it was incorporated. [D] OTHER COMPANIES : 1. One man company : (i) When a single person held almost all the shares of the company, it is called one man company. (ii) This happens in both a private company and a public company though usually they are a private company. (iii) The other members of the company may just hold one share each & bulk of the shares are held by one of the members only. (iv) Such a company has its legal personality, if it complies with the necessary requirements of the company. 2. Non Profit making company : 2. Holding & Subsidiary company : S/4 & 5, (i) When one company holds another company is calledholding company. (ii) The other company which it holds is a subsidiary company. (iii) One company may control another company in any of the following ways:a) Where it controls the composition of board of directors of another company. Where it controls more than half of the total quoting power of the other company. c) Where it holds more than half in nominal value if equity share capital of the other company. d) Where it is a subsidiary of any other company. E.g. Company B is subsidiary of company A & company C is a subsidiary of company B. In such case company C will be subsidiary of company A similarly if company B is a subsidiary company of company C,company B will be subsidiary of B & A & so on. (iv) Holding company & subsidiary company are separate companies & distinct legal entity. (v) The subsidiary company cannot hold shares to make investments in a holding company nor can it hold the shares of holding company. 17 b)

(vi) The holding company shall attach the full documents of Balance sheet in respect of each subsidiary company: a) Copy of the Balance sheet, Profit & Loss A/c with report of Board of Directors & the auditors of its subsidiary company. b) A statement of the holding company in stress in the subsidiary company at the end of the financial year. LOSS OF PRIVILIGES BY A PRIVATE COMPANY: A private company losses its privileges when:1. It fails to comply with the essential requirements of a private company S/3(i)(iii) or 2. It converts itself into a public company. 3. It deems to be the public company under S/43(a) as amended by the co.s amendment act 1974. CONCEPT OF ILLEGAL ASSOCIATION: S/11 1. Any company, association of partnership carrying on banking business with more than 10 members or carrying on any other business with more than 20 members that has for its object the acquisition of gain without being registered under the companies act, shall be considered an illegal association. 2. The exceptions to the above rule are:a) joint family carrying on a business as such is not an illegal association s/11(3) but if two or more such joint families form a partnership for carrying on business with the object of acquisition of gains or profits it must be registered in such cases in computing the no. of persons the minor members of the family must be excluded. b) Stock Exchange is also not considered as an illegal association, since it is not formed for the purpose of carrying on any business. 3. An illegal association cannot enter into contracts, since it has no legal existence. 4. It cannot sue for damages for breach of contract. 5. It cannot be wound up under the provisions of the companies act. 6. It cannot contract debts. 7. It cannot file a suit for the partition of its asset 8. It cannot rank as creditors in the insolvency. 9. All the members shall be personally liable for all the liabilities incurred in carrying on the business of or by the illegal association. 10. The association thus formed is illegal & every member shall be punishable with a fine not exceeding Rs.1000/-

18

CASE LAW:

NARESH KUMAR AGARWAL AND ANOTHER v/s. DAVENDER KUMAR MITTAL AND ANOTHER. 2000-(099)-COMPCAS -0509 DEL Company Petition No. 112 of 1995, decided on May 24, 1996 IN THE DELHI HIGH COURT Satish Chandra for the petitioner. M.R. Chawla for the respondent. JUDGEMENT VIJENDER JAIN J. - This petition has been filed under Section 433 (a), (e) and (f) read with Section 439 of the a Companies Act, 1956, for the winding up of the petitioner-company. Prior to the filing of this petition, the petitioner has filed petition under Section 397 and Section 398 of the Companies Act before the Company Law Board. Certain ex parte interim orders were passed in that petition by the Company Law Board. In para. 21 of the petition the petitioner has stated that petitioner No. 1 was of the view that winding up would be prejudicial to the company and unfair to the interest of petitioner No. 1 and, therefore, the petition before the Company Law Board, as aforesaid, was filed but the present petition has been filed by the petitioner contending that petitioner No. 1 is holding more than 99 per cent. shares and the petitioner is no longer interested in running of the hotel and, therefore, he has no interest in prosecuting Petition No. 16 of 1995 pending before the Company Law Board, NEW DELHI. 19

PRIVATE COMPANIES: (Sec 3(I) (iii)) 1) A private company is a company which by its article of association a) Prohibits the rights to transfer its shares. b) Prohibits any invitation to the public to subscribe to any of its shares or debentures. c) Limits the no. Of its members to 50, excluding its employees member to 50 or passed employee members. 2) When 2 or more persons hold one or more than one share in the company, jointly they shall be treated as a single person. 3) Any 2 person or more than 2 persons (not exceeding 50) can join hands to register a pvt ltd co. 4) The word private ltd should be used at the end of the companys name. 5) Private company must have its own AOA. 6) A private ltd company can be clarified into 3 categories; a) Company ltd by shares b) Company ltd by guarantee(if it has a share capital) c) Unlimited companies (if it has a share capital) PRIVILEGES OF A PRIVATE COMPANY: 1) Only 2 members are required for registration of private company. 2) Only 2 members are required to constitute a quorum for the general meeting of a private ltd company 3) It is not required to hold a statutory meeting or to file a statutory report 4) It can commence business immediately on incorporation 5) It need not file a prospectus or a statement of lien of the prospectus. 6) The provisions regarding minimum subscription before allotment (Sec.69) are not applicable to it. 7) It need not offer further shares to the existing shareholders (Sec.81) 8) Investments in group of cos can be done without any restrictions 9) Restrictions-restrictions regarding remuneration are not applicable. 10) Minimum no. Of directors are only 2. 11) A director of the pvt co need not file his consent to act prior to the appointment (sec.265) 12) Provision as to the proportion of the directors liable to retire by rotation does not apply to a pvt.co. 13) A director of the pvt co. Can vote on a contract in which he is interested. 14) Provisions regarding loans to the directors do not apply. 15) Provisions requiring govt approval for appointment of a whole time or non rotational directors is not required 16) Provisions regarding govt approval for increasing remuneration of the directors do not apply 17) Prohibitions regarding appointment of a managing director for more than 5 years do not apply. 18) Directors contract to take up qualification shares need not to be filed with the registrar of companies 20

19)

Restrictions on advancing loans to other companies do not apply.

PUBLIC COMPANY : SEC 3(1) (IV) 1) States that all companies other than pvt are public companies. 2) Any 7 or more persons can join hands & form (or register) a public company. 3) A public company is further classified into; a) Company limited by shares b) Company limited by guarantee c) Unlimited company (if it has a share capital

When a private company does become a public company 1) By passing a resolution in annual general meeting 2) When the maximum no. Of members exceeds 50 3) When there are no restrictions on transfer of its shares. 4) When there are no restrictions on invitation to the public to subscribe any of its shares or debentures. 5) When not less than 25% of the paid up share capital of a pvt ltd co is held by one or more body corporate. 6) A pvt co subsidiary of another public co shall be deemed to be a public co. 7) When a pvt co. Holds not less than 25% of the paid up share capital of a public company (Sec.43 A(113)). 8) Where the average annual turnover of a pvt.co. is Rs. 5 crore or more for 3 consecutive financial years. (Sec.43 A (1A)). 21

9) When a pvt co. converts itself into a public co. By altering its articles under Sec.44.

Procedures for converting a private company into a public company:

1) Alter the Articles of Association of the co. by a special resolution to eliminate

the 3 restrictions of a private co. Under Sec 3(i)

2) If the number of members is less than 7 it must be raised at least to 7. 3) If the number of directors is less than 3, it must be raised at least to 3.

4) Within 3 months the co. shall inform the registrar of the same and eliminate the words pvt from before the word ltd in the name. 5) The registrar, on being informed of the same shall make consequent changes in the AOA & the certificate of incorporations issued to the company.
6) The company to lodge with the registrar a prospectus or a statement of lien of

the prospectus within 30 days along with a resolution altering the articles.
7) If the company makes any fault than the company and every officer is held

responsible or is liable to a fine of Rs.500 for each day the default continuous.

Procedures for converting a public company into a private company:

1) The company in a general meeting has to pass a special resolutions for altering

the articles so as to include there in the necessary restrictions and to delete any provisions in consistent with the restrictions.
2) The word private should be added to limited. 3) The approval of central govt with alterations to articles (for covering a public

company into a private company) should be obtained. 4) The company to lodge with a printed copy of the altered articles within 1 month of the date of receipt of order of approval. 5) It should also file to registrar, the copy of special resolution altering the articles within 30 days from the date of passing.
6) If the company makes any default then the company and every officer held

responsible is liable to a fine of Rs. 500 for every day the default continuous. FORMATION OF COMPANIES The promoters must make a decision regarding the type of company i.e a pulic company or a private company or an unlimited company, etc and accordingly prepare 22

the documents for incorporation of the company. In this connection the Memorandum and Articles of Association (MA & AA) are crucial documents to be prepared Requirements

1. 7 or more persons with no maximum limit for Public company & 2 or more persons not exceeding 50 for private company.
2. Signature on the Memorandam of association of the company where by

agreeing to take shares of the company mentioned in their names 3. Signature of such persons who are promoters must be attested by the witnesses. 4. Memorandum is than divided into paragraphs, numbered & printed & is filed with the Registrar of Companies (ROC). Note: ROC should be in the state in which registered office of company is established) 5. Along with MOA it also has to file Prospectus & Articles of Association with the Registrar of the company. 6. Once the requirement is complied the registrar issues a Certificate of Incorporation, which declares the company as a legal entity capable of exercising all the functions of a body corporate. 7. Subscribe to the agreed share capital of the company 8. Obtain commencement certificate (for public companies)

23

MEMORANDUM OF ASSOCIATION (MOA). Memorandum means the Memorandum of Association of a company as originally framed or as altered from time to time ,in pursuance of any previous companys law or of the existing act. Memorandum of Association defines the extend & powers of the company also said to be the fundamental charter of the company as it contains the fundamental conditions upon which the company can be incorporated. Purpose towards, 1. Shareholders, creditors & others who deals with the company. 2. Outsiders.

Contents of Memorandum of Association Sec 2(28) 1. Name Clause Company law requires that the name of each company should be unique. As such, the proposed name of the company to be formed has to be approved by the Registrar of Companies and blocked till registration. 24

a. Shall state the name of the co, with the words Ltd or Pvt Ltd as last word of its name. b. Name should not be undesirable or identical or resemble to great extend to other company in existence or registered c. A company cannot use a name which is prohibited under the Names and Emblems (Prevention of Misuse Act, 1950 or use a name suggestive of connection to government or State patronage 2. Domicile Clause The state in which the registered office of company is to be situated is mentioned in this clause. If it is not possible to state the exact location of the registered office, the company must state the exact address either on the day on which commences to carry on its business or within 30 days from the date of incorporation of the company, whichever is earlier. Notice in form no 18 must be given to the Registrar of Companies within 30 days of the date of incorporation of the company. The registered office of the company is the official address of the company where the statutory books and records must be normally be kept. Its important for the purpose of jurisdiction as the high court of the state has jurisdiction to wind up the company.

3. Objects clause

This clause is the most important clause of the company. It specifies the activities which a company can carry on and which activities it cannot carry on. This clause must specify :i. ii. iii. iv. Main objects of the company to be pursued by the company on its incorporation Objects incidental or ancillary to the attainment of the main objects Other objects of the company not included in (i) and (ii) above. In case of the companies other than trading corporations whose objects are not confined to one state, the states to whose territories the objects of the company extend must be specified a. It gives protection to the share holders & others who enters into contract with the company.

4. Liability Clause The companylimited by shares must state

25

The liability of the members or the shareholders is limited to the unpaid amount of the face value of the shares held by each member. The amount of capital with which the company proposes to be registered & division there of into shares of fixed amount & different varities. More subscribes to the MOA shall take less than one share. Each subscriber to the MOA shall write against his name in the MOA the no of shares he takes & should also give that in writing.

5. Capital Clause. The amount of share capital with which the company is to be registered divided into shares must be specified giving details of the number of shares and types of shares. A company cannot issue share capital greater than the maximum amount of share capital mentioned in this clause without altering the memorandum Association Clause A declaration by the persons for subscribing to the Memorandum that they desire to form into a company and agree to take the shares place against their respective name must be given by the promoters.

ARTICLES OF ASSOCIATION (AOA) 26

Articles means Articles of association of a company as as originally framed or as altered from time to time ,in pursuance of any previous companys law or of the existing act including so far as they apply to the company, the regulations contained as the case may be in table A to schedule 1 of this act. The Articles of Association (AOA) contain the rules and regulations of the internal management of the company. The Articles of Association is nothing but a contract between the company and its members and also between the members themselves that they shall abide by the rules and regulations of internal management of the company specified in the Articles of Association. It specifies the rights and duties of the members and directors. The provisions of the Articles of Association must not be in conflict with the provisions of the Memorandum of Association. In case such a conflict arises, the Memorandum of Association will prevail. Normally, every company has its own Articles of Association. However, if a company does not have its own Articles of Association, the model Articles of Association specified in Schedule I - Table A will apply. A company may adopt any of the model forms of Articles of Association, with or without modifications. The articles of association should be in any of the one form specified in the tables B, C, D and E of Schedule 1 to the Companies Act, 1956. Form in Table B is applicable in case of companies limited by the shares, form in Table C is applicable to the companies limited by guarantee and not having share capital, form in Table D is applicable to company limited by guarantee and having a share capital whereas form in table E is applicable to unlimited companies. However, a private company must have its own Articles of Association. The important contents covered by the Articles of Association Sec.13 includes:1. 2. 3. 4. 5. 6. 7. 8. 9. Powers, duties, rights and liabilities of Directors Powers, duties, rights and liabilities of members Rules for Meetings of the Company Dividends Borrowing powers of the company Calls on shares Transfer & transmission of shares Forfeiture of shares Voting powers of members, etc

DOCTRINE OF ULTRAVIRES : 1. Based on common sense, a Co. cannot be given a roaming communication to go where it likes or, to do what it wills but the Co. must circumscribe itself within the limits & powers mentioned in the Memorandum of Association of the Co. & Cos act 1956. 27

2. If it goes beyond it, it loses its object then such acts will be ultravires. 3. The object of declaring such act as UV is to protect the interest of the shareholders & all those who deal with the company. 4. Suppose, all the shareholders of the Co. give consent to purchase its own shares (which is illegal under the Cos act 1956) the Co. comes under the doctrine of UV. 5. The doctrine of UV must be reasonably understood according to the circumstances to each specified case. 6. Illustration: a. Suppose an association is formed for running tram way but it runs luxury buses, it is UV. b. Co. formed for erecting the building cannot use Cos find for manufacturing machines. c. A Co. cannot take over the business of another company unless there is a provision to that effect in the memoranda. d. A. Co. cannot pay money to a member of the parliament in consideration of his not opposing the bill in the parliament. e. It is UV for a company to enter into a partnership or amalgamation of another company in the absence of the power given to it in the Memorandum of Association. 7. Some of the points are worth noting as regards to the doctrine of UV. a. The company exists only for the objects which are expressly stated in its object clause or which are incidental upon these specified objects. b. Any act done outside the expressed or implied objects if UV. c. The UV acts are null, void & void Abnitio; - The Company is not bound by this act & neither the Co. nor the other contracting party can sue upon it. d. In case of a Co. is about to undertake an UV act, the members of the Co. [even UV acts. e. If the directors have exceeds their authority & done something then matter can be rectified by the general body of the shareholders, provided the Co. has a capacity to do so by its MOA. 28 a single member] can get an order of injunction restraining the Co. to ahead with

f. If any property acquired by the Co.

under an UV transaction may be

protected by the Co. against the damaged by the 3rd person. The doctrine of ultra vires could not be established firmly until 1875 when the following case was decided by the House of Lords. The decision in this case confirmed the application of this doctrine to the companies by registration under Companies Act. CASE LAW:

In Ashbury Railway Carriage and Iron Company Ltd v. Riche, (1875) L.R. 7 H.L. 653., In this case, the objects of the company as stated in the objects clause of its memorandum, were to make and sell, or lend on hire railway carriages and wagons, and all kinds of railway plaint, fittings, machinery and rolling stock to carry on the business of mechanical engineers and general contractors to purchase and sell as merchants timber, coal, metal or other materials; and to buy and sell any materials on commissions or as agents. The directors of the company entered into a contract with Riches for financing a construction of a railway line in Belgium. The contract was ratified by all the members of the company, but later on it was repudiated by the company. Riche sued the company for breach of contract. Issue: whether the contract was valid and if not, whether it could be ratified by the members of the company? The House of Lords held unanimously that: (a) The contract was beyond the objects as defined in the objects clause of its memorandum and, therefore it was void, and 29

(b) The company had no capacity to ratify the contract. Decision: The House of Lords has held that an ultra vires act or contract is void in it inception and it is void because the company had not the capacity to make it and since the company lacks the capacity to make such contract, how it can have capacity to ratify it. If the shareholders are permitted to ratify an ultra vires act or contract, it will be nothing but permitting them to do the very thing which, by the Act of Parliament, they are prohibited from doing. The House of Lords has expressed the view that a company incorporated under the Companies Act has power to do only those things which are authorized by its objects clause of its memorandum and anything not so authorized (expressly or impliedly) is ultra vires the company and cannot be ratified or made effective even by the unanimous agreement of the members. Later on, in the case of Attorney General v. Great Eastern Railway Co.4, this doctrine was made clearer. In this case the House of Lords affirmed the principle laid down in Ashbury Railway Carriage and Iron Company Ltd v. Riche5 but held that the doctrine of ultra vires ought to be reasonable, and not unreasonable understood and applied and whatever may fairly be regarded as incidental to, or consequential upon, those things which the legislature has authorized, ought not to be held, by judicial construction, to be ultra vires. After the case of Attorney General v. Great Eastern Railway Co.6 a company incorporated under the company Act has power to carry out the objects set out in the objects clause of its memorandum and also everything that is reasonably necessary to enable it to carry out those objects.

DOCTRINE OF CONSTRUCTIVE NOTICE : 1. The Memorandum of Association & Articles of Association of the Company are required to be registered as public documents under S/74 of the Indian Evidence Act. 2. Inspection of the document can be taken by any members of the public form, the registrar of the Company on payment of a nominal fee of Rs. 1 only. 3. Being public document every member of the public dealing with the Company shall be demand to have a notice & knowledge of its contents & shall be deemed to have read its contents. 4. Therefore, any person who contemplates entering into contract with the Company has the means of ascertaining & thus is presumed to know the powers of the Company & the extent to which they have been delegated to the directors. 5. This is known as Document of Constructive Notice. 6. If the provision in the articles provide a particular contract to enter into a particular manner, a number entering into a contract with a Company must see 30

that it is entered into a particular manner otherwise he will not be liable to file a suit against a Company when the dispute arises. 7. This lead to an important case in the English Co. law history knows as the rule in Royal British Bank Case. 8. In the above case the articles of the Company provide that in a particular contract there must be signatures of 2 directors of the Company the person entering into contract with the Company must enter into contract with the Company in a particular manner. But he is not beyond to know the regularity of the Companys internal management. 9. Such a person is not bound to know whether these particular directors who have entered into contract with him were validly appointed by the Company or whether there is any disqualification attached to their appointment. 10. Except securing 2 signatures on the contract, the person entering into contract with a Company is not concerned with the other irregularities with the Company provided that he has no actual or constructive notice of such irregularity otherwise he cannot secure protection of the above rules as matters of the internal management of the company are assumed to be dually complied with the company. III. DOCTRINE OF INDOOR MANAGEMENT: The Doctrine of Constructive Notice throw a burdon on people entering into contract with the company that they are presumed to have read them. On the other hand the Doctrine of Indoor Management allows although who deals with the company to assume that the provision of the articles have been observed by the officers of the company. In other words they are not bound to enquire into the regularity of the internal proceedings. An outsider is not accepted to see that the company carries out its internal regulation. For e.g. The directors of a Company were authorized by the articles to borrow on bond such sum of money from time to time, by a resolution of the Company in general meting, be authorized to be borrowed. The directors gave a bond to Mr. T without the authorities of any such resolution. The question arises whether the Company was liable on the bond?

31

Held: The Company was liable on the bonds as Mr. T was entitled to assume that the resolution of the Company in General Meeting has been passed. The Doctrine of Indoor Management is subject to following exceptions: 1. The Rules do not protect any person who has actual or constructive notice of the bond of authority of the person acting on behalf of the Co. For instance, the Articles of the Company empowered the directors of borrow Rs. 1000/- with consent of the Company in General Meeting without such consent they borrowed Rs. 2500/- from them & took Debentures. The Company refuses to pay the amount. 2. The rule cannot be invoked in favour of the person who didnt consult The Memorandum of Association & the Articles Of Association & thus didnt rely on then. 3. The rules do not apply the transaction which are void, illegal or void abinitio. For instance, the Secretary of the Company forged with signature of 2 of the directors required under the articles of a share certificate & issued the certificate without the authority. The applicants claimed to be entitled to register of the member of the Company. Held: The certificate was void & the holder of the share certificate & would not take the advantage of Doctrine of Indoor Mgmt. 4. If an officer of the company does something which would not be orderly with within his powers the person dealing with him must make proper enquiries & satisfy himself as to the officers authority of he fails to make enquiry, he cannot rely on the rule. For e.g. : A person who was a sole director & in-principle shareholder of a company paid into his own account cheques drawn in favour of the Company the bank should have made the enquiries as to the powers of there directors. The bank was put upon enquiry & was accordingly dis-entitled to rely upon the ostensible authority of the director. 5. Negligence: Where the irregular in the affairs of the company could be discovered with proper enquiries & with ordinary diligence. PROSPECTUS: 32

DEFINITION OF PROSPECTUS: S/2(36) Prospectus means any document described or issued as a prospectus and includes any notice, circular, advertisement or other document inviting deposits from the public or inviting offers from the public for the subscription or purchase of any shares or debentures of a body corporate. Thus, definition of prospectus includes any invitation to the public to subscribe for the shares and debentures of the company. Thus any document contains an offer for sale of shares or debentures shall be deemed to be a prospectus and all the provisions of the prospectus shall apply to it. Prospectus is therefore a document to which company receives capital by issue of its shares and debentures to carry on its business. A Public Ltd . company must issue prospectus and it must contain all the matters specified in part I and II of schedule II and reports specified in part II of schedule II of the Companies Act. No prospectus shall be issued unless on or before the date of issue a copy of the prospectus has been delivered to the registrar of the company for registration. It must be duly signed by every person who has been named therein as a director or a proposed director of the company as well as the promoter of the company. All the relevant documents prescribed under the Act must be attached to the copy of the prospectus. Every person authorized to issue a prospectus has a primary responsibility to see that the prospectus contains true state of affairs of the company and it does not give any fraudulent picture to the public. People are invited on the basis of information published in the prospectus and therefore their interest must be safeguarded against all false and wrong statements in the prospectus. Thus, prospectus must contain full and honest declaration of material facts without concealing or omitting any relevant facts or information. This rule is known as GOLDEN RULE FOR FRAMING THE PROSPECTUS. Every person who is authorized to issue the prospectus is liable for a false statement in the prospectus both in civil and criminal courts. CASE LAW:

33

Derry v/s Peek-(1889) It has been held if the person making the statements honestly believes it to be true; he is not guilty of fraud, even if the statement is not true. The facts of the case were: The tramway company had a power by a special act to make tramways and to use steam power with the consent of Board of Trade. The plans of the company were approved. The directors of the company honestly believed that since the plans were approved, permission to use steam power from the Board of Trade was only a formality and that it would have been granted. Thus, directors of the company issued the prospectus where directors stated that the consent to use steam power was obtained by the company. Subsequently, the consent was refused by the Board of Trade and the company had to wind up. Upon the action taken by one of the shareholders against the director for fraud, it was held that the directors were not liable for fraud as they honestly believed that the consent of Board of Trade would be obtained by the Company and that there was no intention to cheat the investors though the statement was untrue. The prospectus which contains misleading statement is called MISLEADING PROSPECTUS.

MEETINGS: The General Body of the meeting can be classified under the following 3 heads: 1) Statutory Meeting 2) Annual General Meeting 3) Extra Ordinary General Meeting

STATUTORY GENERAL MEETING:

34

Every Company limited by share and having share capital must with a period of not less than 1 month and not more than 6 months from the date of when the company was entitled to commence its business must hold a general meeting of the members of the company which is called a statutory meeting. It is the first general meeting of the company for the members of the company. It is held once in the lifetime of the company. The Board of Directors must send atleast 21 days notice before the day of meeting. A notice of the meeting to every member stating there in the Statutory Meeting along with the report to every member of the company containing all information which are required to be stated in the Statutory Report as per the Companies Act 1956. The purpose of calling such meeting is to inform shareholders about the existing position and future plans and prospectus of the company. The members of the company present in the meeting are at liberty to discuss any matter relating to the formation of the company or arising out of statutory report of the company. The Statutory Report must be certified, by atleast 2 directors, one of them shall be the Managing Director. The auditors of the company shall also certify that a part of statutory report which relates to shares allotted, cash received thereof and receipts and payments and the balance of cash in hand are correct. If default is made in complying with the provisions of S/165 of statutory report, every director or officers of the company who are responsible for such default are liable for punishment and a fine which may not exceed Rs 500/- and company may wind up. ANNUAL GENERAL MEETING: S/166-S/168 As the name signifies, this is an annual general meeting of the company. The provisions relating to this meeting are summarized as follows: 1) Every company whether public or private or having share capital or not, limited or unlimited, must hold this meeting. 2) The meeting must be held in each calendar year and not more than 15 months shall elapse between 2 two meetings. However, the first AGM may be held within 18 months from the date of its incorporation and in that case it need not hold any such meeting in the year of its incorporation or in the following year. The maximum gap between two such meetings may be extended by 3 months by taking permission of Registrar of Companies. 3) The meeting must be held on a working day during business hours at the registered office of the company or at some other place within the city, town, village in which the registered office of company is established. 4) The business to be transacted at such a meeting is ordinary business which relates to following mattersi) Consideration and adoption of accounts and the reports of the board of directors and auditors. Ii) Declaration of the dividend 35

iii) Election of directors in place of those retiring. iv) Appointment of auditor and fixation of their remuneration. v) Any other business transacted at the meeting will be deemed to be a special business. The company must give 21 days notice to all the members of the company and auditor. A copy of the directors report on the companys position together with a copy of the audited accounts and auditors report must accompany the notice. Also a proxy form is attached with notice on which it is specifically mentioned that a member entitled to vote is entitled to appoint a proxy and proxy need not be member of the company. 6) If default is made in holding the meeting, the Central Government, on the application of any member of the company, call or direct to call a meeting. If the company fails to hold the meeting either originally or when directed to do so by the central government, then the company and every officer of the company who is in default shall be punishable with a fine upto Rs 5000/- and in case of continuing default with a further fine of Rs 250/- per day the default continues. EXTRA-ORDINARY GENERAL MEETING: S/169 Any meeting of the member of the company other than the Statutory Meeting and the Annual General Meeting is called the Extra-Ordinary General Meeting. The legal provisions as regards such meetings are summarized as follows1) It is convened for transacting some special or urgent business which has to be done before the next AGM such as changes in the object clause or registered office or for alteration of share capital. 2) It is usually called by the Board of Directors accordingly, but the board must call the meeting if requisitioned by Members of the company holding not less than 1/10th of the paid up share

5)

capital or
A member representing not less than 1/10th of the total voting rights of the

company has no share capital. The requisition must state the objects of the proposed meeting, be signed by the people doing requisitions and must be deposited at the companys registered office. If within 21 days of the deposits of the requisitions, the board of directors does not convey the meeting on a day not later than 45 days from the date of requisition, the people doing requisitions may themselves call the meeting within 3 months of the requisition. Whatever reasonable expenses are incurred by the people doing requisitions in calling and holding the meeting shall be paid by the company and the company may recover the same from the directors who were at fault in not holding the requisitioned meeting. 36

The meeting doing requisitions should give 21 days notice of the meeting, to the members stating therein the object and the special business. DIRECTORS:

Every public company (other than a public company which has become such by virtue of section 43A)] shall have at least three directors: Provided that a public company having,(a) a paid-up capital of five crore rupees or more; (b) one thousand or more small shareholders, may have a director elected by such small shareholders in the manner as may be prescribed. Explanation.-For the purpose of this sub-section "small shareholders" means a shareholder holding shares of nominal value of twenty thousand rupees or less in a public company to which this section applies. (2) Every other company shall have at least two directors.

(3) The directors of a company collectively are referred to in this Act as the "Board of directors" or "Board". In default of and subject to any regulations in the articles of a company, subscribers of the memorandum who are individuals, shall be deemed to be the directors of the company, until the directors are duly appointed in accordance with section 255.

37

No body corporate, association or firm shall be appointed director of a company, and only an individual shall be so appointed. Appointment of directors and proportion of those who are to retire by rotation (1) Unless the articles provide for the retirement of all directors at every annual general meeting, not less than two-thirds of the total number of directors of a public company, or of a private company which is a subsidiary of a public company, shall(a) be persons whose period of office is liable to determination by retirement of directors by rotation; and (b) save as otherwise expressly provided in this Act, be appointed by the company in general meeting. (2) The remaining directors in the case of any such company, and the directors generally in the case of a private company which is not a subsidiary of a public company, shall, in default of and subject to any regulations in the articles of the company, also be appointed by the company in general meeting. Right of persons other than retiring directors to stand for directorship (1) A person who is not a retiring director shall, subject to the provisions of this Act, be eligible for appointment to the office of director at any general meeting, if he or some member intending to propose him has, not less than fourteen days before the meeting, left at the office of the company a notice in writing under his hand signifying his candidature for the office of director or the intention of such member to propose him as a candidate for that office, as the case may be, 1[along with a deposit of five hundred rupees which shall be refunded to such person or, as the case may be, to such member, if the person succeeds in getting elected as a director]. (1A) The company shall inform its members of the candidature of a person for the office of director or the intention of a member to propose such person as a candidate for that office, by serving individual notices on the members not less than seven days before the meeting: Provided that it shall not be necessary for the company to serve individual notices upon the members as aforesaid if the company advertises such candidature or intention not less than seven days before the meeting in at least two newspapers circulating in the place where the registered office of the company is located, of which one is published in the English language and the other in the regional language of that place. (2) Sub-section (1) shall not apply to a private company, unless it is a subsidiary of a public company. Right of company to increase or reduce the number of directors Subject to the provisions of sections 252, 255 and 259, a company in general meeting may, by ordinary resolution, increase or reduce the number of its directors within the limits fixed in that behalf by its articles. 38

Increase in number of directors to require Government sanction In the case of a public company or a private company which is a subsidiary of a public company, any increase in the number of its directors, except(a) in the case of a company which was in existence on the 21st day of July, 1951, an increase which was within the permissible maximum under its articles as in force on that date, and (b) in the case of a company which came or may come into existence after that date, an increase which is within the permissible maximum under its articles as first registered, shall not have any effect unless approved by the Central Government; and shall become void if, and in so far as, it is disapproved by that Government : Provided that where such permissible maximum is twelve or less than twelve, no approval of the Central Government shall be required if the increase in the number of its directors does not make the total number of its directors more than twelve. CONCLUSION The Companies Act 1956, has resulted in encouragement of investment, it also ensures proper administration, arranges for investigation and prevents malpractices.

39

FORM NO. 1 Registration No. of Company .......... Rs. ................ THE COMPANIES ACT, 1956 Declaration of compliance with the requirements of the Companies Act, 1956 on application for registration of a company [Pursuant to section 33(2)] Name of Company Presented by .. I, ., of do solemnly and sincerely Declare that I am [1] who is engaged in the formation of the company, or a person Named in the articles as a director/manager/secretary of the Limited/Private Limited. And that all the requirements of the Companies Act, 1956, and the rules thereunder in respect of matters precedent to the registration of the said company and incidental thereto have been complied with. And make this solemn declaration conscientiously believing the same to be true. Date Place Witness Signature Designation 1. An advocate of the Supreme Court of the ...................... High Court, an attorney or a pleader entitled to appear before the ........................... High Court or a chartered accountant practising in India. 2. State whether director, manager / secretary /advocate/ chartered account. FORM NO. 1A THE COMPANIES ACT, 1956 Application form for availability of names* The registrar of Companies, Limited/Private Limited Nominal Capital :

40

Sir, Subject: AVAILABILITY OF NAMES---INFORMATION---FURNISHING OF We, the following applicants, are desirous of forming a company to be registered under the companies Act, 1956 in the state of1. Name and full address of the person(s) applying for the availability of the name (in block capitals) 2. Proposed name of the company 3. State whether public or private 4. In case the proposed name mentioned in item (2) is not available, 3 names to be considered in the order of preference 5. Main object of the proposed company 6. Name and addressees of the prospective directors or promoters, etc. 7. Particulars of the names and situations of registered offices of other companies in the same group or under the same management 8. Proposed authorised capital 9. Please furnish particulars and results of any application moved to this or any other Registrar previously for availability of name 10. Particulars of remittance of fee (Draft/IPO) Rs.

Situation Dated *Refer rule 4A

Signature of the applicants

41

FORM NO. 1AB THE COMPANIES ACT, 1956 Consent of the person charged by the Board with the responsibility of complying with the provisions of the Act [Pursuant to section 5(f)] To The Board of Director of Ltd.

I son of hereby given my consent for being charged by the board of directors of the company above named with the responsibility of complying with the under-mentioned provisions of the Companies Act, 1956. 1. 2. 3. Date this day of 19 Signature Name of the Person

42

FORM NO. 1B Registration No. of Company Nominal Capital : Rs. THE COMPANIES ACT, 1956 Application for the approval of the Central Government for conversion of a public company into a private company [Pursuant to proviso to section 31(1)]* 1. Name of the company and address of its registered office 2. The date of its incorporation 3. The existing capital structure of the company [A copy of current Memorandum and Articles and a copy of the latest balance-sheet and profit and loss account should be attached] 4. The name of the managing director, etc., if any, and the tenure of office, if fixed and details of remuneration payable 5. The reasons for conversion 6. The number of members of the company at the time the decision for conversion was taken 7. The names, if available, of the members present at the meeting in which the decision was taken 8. The names, if available, of the members of the company who voted in favour of the proposal for conversion and their respective shareholdings. 9. The name, if available, of members, if any, who voted against the proposal for conversion and their respective shareholdings. The grounds put forth by them, if any, so as to justify the opposition to the proposal should also be stated in detail [A copy of the minutes of the meeting shall be attached.] 10. Whether a copy of the special resolution under section 31 has been filed with the Registrar of Companies as required under section 192 of the Companies Act, 1956 Date the day of 19 Signature Designation ! See rule 4B. State whether director, managing/whole-time director, manager or secretary. 43

44

FORM NO. 2A

COMPANIES ACT, 1956

Memorandum containing salient features of prospectus

[See section 56(3)]

I GENERAL INFORMATION

(a) Name and address of registered office of the company (b) Issue listed at: [name(s) of the stock exchanges] (c) Opening, closing and earliest closing dates of the issue (d) Name and address of lead managers (e) Name and address of trustees under debenture trust deeds (in case of debenture issue) (f) Rating for the debenture/preference shares, if any, obtained from CRISIL or any recognised rating agency.
II CAPITAL STRUCTURE OF THE COMPANY

(a) Issued, subscribed and paid-up capital (b) Size of present issue giving separately reservation for preferential allotment to promoters and others (c) Paid-up capital (i) after the present issue, (ii) after conversion of debentures (if applicable).
III TERMS OF THE PRESENT ISSUE

(a) Authority for the issue, terms of payments and procedure and time schedule for allotment and issue of certificates (b) How to apply ------ availability of forms, prospectus and mode of payment (c) Special tax benefits to company and shareholders under the Income-tax Act, if any. IV PARTICULARS OF THE ISSUE. (a) Object of the issue (b) Project cost Means of financing (including contribution of promoters)
V COMPANY, MANAGEMENT AND PROJECT

(a) History, main objects and present business of the company. (b) Background of promoters, managing director/whole-time director and names of nominees of institution, if any, on the board of directors. (c) Location of the project. (d) Plant and machinery, technology, process, etc. (e) Collaboration, performance guarantee, if any, or assistance in marketing by the collaborators. (f) Infrastructure facilities for raw materials and utilities like water, electricity, etc. (g) Schedule of implementation of the project and progress made so far, giving details of land acquisition. Execution of civil works, installation of plant and machinery, trial production, date of commercial production, if any. (h) The products_____ (i) Nature of product(s)__ consumer/industrial and end-users. (ii) Exiting, licensed and installed capacity of the product, demand of the product existing, and estimated in the coming years estimated by a Government authority or by any other reliable institution, giving source of the information. 45

(iii) Approach to marketing and proposed marketing and proposed marketing set up. In case of company providing services, relevant information in regard to nature/extent of services , etc. , to be furnished (i) Further prospectus___ the expected year when the company would be able to earn net profit, declare dividend. VI FINANCIAL PERFORMANCE OF THE COMPANY FOR THE LAST FIVE YEARS: (figures to be taken from the audited annual accountants in tabular from)\ (a) Balance sheet data; equity capital, reserves (state revaluation reserve, the year of revaluation and its monetary effect on assets ) and borrowings. (b) Profit and loss data: sales, gross profit, net profit, dividend paid , if any. (c) Any change in accounting policies during the last three years and their effect on the profits and reserves of the company. (d) Stock market quotation of shares/debentures of the company, if any (high/low price in each of the last three years and monthly high/low price during the last six months). VIIWHETHER ALL PAYMENTS/ REFUNDS, DEBENTURES, FIXED DEPOSITS, INTEREST ON FIXED DEPOSITS, DEBENTURE INTEREST, INSTITUTIONAL DUES HAVE BEEN PAID UP TO DATE. IF NOT, DETAILS OF THE ARREARS, IF ANY, TO BE STATED. VIII FOLLOWING PARTICULARS IN REGARD TO THE LISTED COMPANIES UNDER THE SAME MANAGEMENT WITHIN THE MEANING OF SECTION 370(1B) WHICH MADE ANY CAPITAL ISSUE IN THE LAST THREE YEARS: (a) Name of the company. (b) Year of issue. (c) Type of issue (public/rights/composite). (d) Amount of issue. (e) Date of closure of issue. (f) Date of despatch of share/debenture certificate completed. (g) Date of completion of the project. (h) Rate of dividend paid. IX MANAGEMENT PERCEPTIONS OF RISK FACTORS (E.G. SENSITIVITY TO FOREIGN EXCHANGE RATE FLUCTUATIONS, DIFFICULTY IN AVAILABILITY OF RAW MATERIALS OR IN MARKETING OF PRODUCTS, COST/TIME OVERRUN.) Note: Term year wherever used, hereinbefore, means financial year. If the company does not receive application money for at least 90% of the issued amount, the entire subscription will be refunded to the applicants within ninety days from the date of closure of the issue. If there is delay in the refund of application money by more than 8 days after the company becomes liable to pay the excess amount, the company will pay interest for the delayed period, at prescribed rates in sub-sections (2) and (2A) of section 73. No statement made in this form shall contravene any of the provisions of the companies Act, 1956, and the rules made thereunder. Place: Date: Signatures of directors 46

47

FORM NO. 5 Registration No Nominal Capital Rs

COMPANIES ACT, 1956 Notice of consolidation, division, etc.,/increase in share capital/increase in number of members [Pursuant to sections 95, 97/94A(2)/81(4)] Name of the company. Notice is hereby given:__ *1. In accordance with section 95 of the Companies Act, 1956 that** *2. In accordance with section 97 of the companies Act, 1956 that by ordinary resolution/special resolution of the company dated the day of 19 (i) the authorised share capital of the company has been increased by the addition thereto the sum of Rs. beyond the present authorised capital of Rs. .. (ii) that the number of members in the company has been increased by the addition thereto of members beyond the present registered number of *3 (I) In accordance with sub-section (3) of section 94A of the Companies Act, 1956 that the share capital of the company has been increased beyond the present authorised capital of Rs. by Rs. consequent upon an order dated Of the Central Government under sub-section (4) of section 81 or sub-section (2) of section 94A of the Act on an application made to it by .(here mention the name of the financial institution) for conversion of debentures /loans into shares. (ii) a copy of the aforesaid order was received by the company from the Central Government on 4. The additional capital is divided as follows:

No. of shares (1)

Class of shares (2)

Nominal amount of each share (3)

The condition (e.g. Voting rights, dividend rights, winding-up rights, etc.) subject to which new shares have been issued, are as follows.(if any of the new shares are preference shares. State whether they are redeemable or not). Dated this day of 19 Signature Name In Block Capital) Designation 48

49

FORM No. 7B THE COMPANIES ACT, 1956 Share Transfer Form [Pursuant to section 108(IA)1] Date of presentation of the prescribed authority For the consideration stated below the "Transferor(s)" named do hereby transfer to the Transferee(s)named the shares specified below subject to the conditions on which the shares are now held by the transferor(s) and transferee(s) do hereby agree to accept and hold said shares subject to the conditions aforesaid.
FULL NAME OF COMPANY NAME OF THE RECOGNISED STOCK EXCHANGE WHERE DEALT IN IF ANY

DESCRIPTION OF EQUITY/PREFERENCE SHARES

No in figures
Distinctiv From e number To Corresponding Certificate Nos.

Number in words

Consideration (in figures)

Consideration (in words)_

TRANSFEROR(S) [SELLER)] PARTICULARS

Folio No.
1. 2. 3. 4. .

Read.

Signature(s)

Name (s) in full

1. 2. 3. 4.

Signature of Witness
ATTESTATION I, hereby attest the signature of the transferor(s) herein mentioned Signature Name Address/Seal *Please see overleaf instruction

. Name & Address of witness

Pin

TRANSFEREE(S) [BUYER(S)] PARTICULARS Name 1. (s) in full 2. 3.

Signature(s) 1. 2. 3. .

50

1. 2. 3.

OCCUPATION

ADDRESS

FATHERS/HUSBANDS NAME

Transferee(s) existing Folio, if any, in same Order of Names

Value of stamps affixed

RS.

DATED This . Day Of .. One Thousand Nine Hundred PLACE For office use only Folio Company Code Checked by Specimen 1. Signatures tallied by Signature(S) of 2. Entered in Register of transfer No Transferee(s) 3. . Approval Date..

Continuation of front page (Herein enter the Distinctive numbers when the space on the front page is found to be insufficient)
Distinctiv From e number To Corresponding Certificate Nos.

INSTRUCTIONS FOR ATTESTATION: Attestation, where required (thumb impressions, marks, signature difference, etc.) should be done by a Magistrate, Notary Public or Special Executive Magistrate or a similar authority holding a Public Office and authorised to use the Seal of his office or a member of a recognised Stock Exchange through whom the shares are introduced or a manager of the transferor's bank. NOTE: Names must be rubber stamped preferably in a straight line. Chronological order should be maintained. Broker's Clearing Number should be stated when delivery is given by a Clearing Member Bank.
Name of delivery Broker or Clearing Number Date POWER OF ATTORNEY PROBATE DEATH CERTIFICATE

LETTERS OF ADMINISTATION Registered with the company No. date . (Signature [not initials] of Broker, Bank, Company or Stock Exchange Clearing House} LODGED BY........................... .. FULL ADDRESS. . . SHARE CERTIFICATES TO BE RETURNED TO (Fill in the name and address to which the certificates are required to be returned) NAME & ADDRESS .. .. .. SHRE TRANSFER STAMPS

51

* To be filled only if the documents are lodged by a person other than the transferee.

FORM NO. 7BB OTC Exchange of India Date of presentation to the prescribed authority [Pursuant to sub-rule (2A) of rule 5A Companies (Central Governments) General Rules and Forms, 1956 read with section 108(1A) of the Companies Act, 1956] COUNTER RECEIPT AND TRANSFER FROM Scrip details: C.R. No Scrip Code: Scrip Name: Transaction details: Transaction id: Date Time: Market Maker Name: Market Marker Code Quantity: Rate Value (consideration) (in figures): (in words): Brokerage: Stamp Duty: Total Value: Issuing Counter details . Investors details:. Counter Code: Investors Code: Counters Name: Investors Name: Counters Signature: Investors signature : Distinctive Number Range: Form To Quantity

TRANSFER PARTICULARS For the consideration of Rs (Rupees ) the transferor(s) named do hereby agree to transfer to the transferee(s) to be made, the shares specified in this document, subject to the conditions on which the said shares are now held by the transferor(s) and to be held by the transferor(s) and to be held by trnsferee(s) do hereby agree to accept and hold the said shares subject to the conditions aforesaid: 52

Transferor(s) (seller)/ Transferee(s) (Buyer) Particulars Regd. Folio No. Name of the Holder Address Code No. Signature(s)

Attestation: Signature of witness Name and address of the witness Ihereby attest the Signature of the Transferor(s) hereinmentioned Signature Name and Address/Seal of the Counter

Power of Attorney/probate/Date Certificate/Letter of Administration registered with the Company No. . Date. Signature [(not initials) of Counter/Bank/Company] Lodged by Share Certificate to be returned to (fill in the name and address to which the certificate are required to be returned) *Note :To be filled only if the documents are lodged by a person other than the transferee. #Counter means and includes Member and Dealers of QTCEL. Terms and condition: 1. 2. 3. 4. This contract is made subject to the Rules, Bye-laws, Code of Conduct and Regulation of OCT Exchange of India and the provisions of the law of the land for the time being in force. Brokerage, where applicable, may be charged at the rates not exceeding the official scale and will be indicated in the Counter Receipt/State Confirmation Slip. Transaction fees for every transaction and services charged for investor services may be levied as per the rates specified by OTC Exchange of India from time to time. The Counter Receipt (CR) is valid for trading only at the authorised counter OTC Exchange of India. 53

5. 6.

7.

8.

9. 10. 11.

12. 13.

14.

The CR authorises the holder to exchange the same for share Certificates and vice versa, at the option of the holder. The first holder of a CR is authorised to transact on behalf of all the holder. The other holder will be deemed to have given their consent for all transactions. However, all the holder will have to sign on part B of the Counter Receipt and transfer from, in the shares are registered in the Companys books in the investors name. The seller/buyer of shares will sign the transfer from as transferor/transferee Transfer would take place, within reasonable time, without reference to the relevant company, if the investor s purchase/holding does not exceed 0.5% of the Companys paid-up capital or such other limit, as may be stipulated from time to time. The transferred CR will be bear the words Transferred CR on the CR. The transferred CR will not indicate the details of the transaction, Therefore, the investor is advised to keep a record of it separately before sending in the CR for transfer. Safe custody of any trading document of OTC Exchange of India is at the risk of the holder. The CR is a very valuable document and the holder is requested to keep it safely. If a cheque issued in pursuance of the contract is liable to be declared null and void. In the event of any claim (whether admitted or not), difference or dispute arising out of this contract, the matter shall be submitted to and decided by the arbitration committee as provided in the Rules, Bye-laws and Regulations of the OTC Exchange of India. The jurisdiction of this contract extends to the whole of India where counters authorised by OCT Exchange of India operates. In case of any dispute, notice and communications to a member or non-member shall be served in any one or more all of the following ways and any such notice or communication under (a) to (h) below shall be served at his ordinary business address and /or at his ordinary place of residence and/or at his last known address:-(a) by delivering it by hand ; (b) by sending it by registered post: (c) by sending it under certificate of posting ; (d) by sending it by express delivery post; (e) by sending it by telegram; (f) by affixing it on the door at the last known business and residential address; (g) by its oral communication of the party in the presence of third person; (h) by advertising in at least once in any daily newspaper published in Bombay. All dealing, transactions and contracts which are subject to the Rules, Regulations and Buy-laws of the Exchange and every arbitrating agreement to deemed in all respects to be subject to the Rules, Regulations and Bye-laws of the Exchange and shall take effect as wholly made, entered into and to be performed in the whole of India and parties to such dealings, transactions, contracts or agreements shall be deemed to have submitted to the jurisdiction of the courts all over India for the purpose of giving effect to the rules, Regulations and Bye-laws of the exchange. 54

15.

Upon the sale of the said share, the transferee authorises the company or OTC Exchange of India or any persons(s) authorised by OTC Exchange of India regard, to the above declaration as authority for transferring the said shares to the subsequent person(s) who request the said shares to the transferred in the latters name.

FORM NO. 17 Registration No. of the Company Nominal Capital: Rs THE COMPANIES ACT, 1956 Memorandum of complete satisfaction of charge [pursuant to section 138] Name of the company Limited /Private Limited Presented by Limited/Private Limited/ Hereby gives notice that the registered charge being of which particulars were registered with Registrar of Companies on the day of 19 was satisfied in full on the day of 19 the debts for which the charge was given having been paid or satisfied. Dated this Day of 19 Signature Designation or position in relation of the Company 1. charge includes mortgage see section 124. 2. A description of the instrument(s) creating or evidencing the charge, e. g. mortgage charge, Debenture etc. with the date there of should be given. If the registered charge was a Series of Debentures or Debenture Stock the words authorised by resolution, together with the date of the resolution should be added.

55

FORM NO. 18 Registration No. of the Company Nominal Capital: Rs THE COMPANIES ACT, 1956 Notice of the situation/change of situation of registered office [pursuant to section 146] Name of the company Notice is hereby given that ---1. (a) the registered office of the company is situated .with effect from [date] (b) the situation of the registered office of the company of was changed from to with effect form . [date] 2. Situation of registered office falls under the jurisdiction of (name of the police station).* Dated this Day of 19 Signature Name (In Block Capitals) Designation
*State address of nearest police station with district and tehsil.

FORM NO. 23 Registration No. of company. Nominal Capital: Rs. THE COMPANIES ACT, 1956 Registration of Resolution(s) and Agreement(s)] [Pursuant to section 192] Name of the company Date of despatch of notice Date of passing Place of meting Board A. Copy of the Shareholders resolution(s) each passed/agreed to by Class of 56

the

shareholders. Creditors

the particulars of which are given below is/are filed along with the certified true copy of the explanatory statement under section 173, where applicable, for record. S. Subject No matter of . resolution Reference to requirement under the Companies Act, 1956 3 Whether ordinary or special resolution or with requisite majority 4 Authority passing/ agreeing to the resolution 5

B.

Copy of the agreement made, whose particulars are given below is enclosed for record Reference to section of the companies Act, of applicable 3 Date of agreement 4 Authority adopting the agreement 5

S. SubjectNo matter of . agreement 1 2

C.

It is certified that copy of the agreement(s) filed herewith is/are a true copy (ies) of the original.

Signature . Name .. (In Block Capital) Designation.. Dated the day of 19 Notes: 1. Authority adopting the agreement should be specified with reference to the requirement of the Act, as to the validity of the agreement. 2. Copies of resolutions should contain reference to the serial number given in A above.

57

FORM NO. 23AA Registration No. . Nominal Capital Rs. . THE COMPANIES ACT, 1956 Notice of address at which books of accounts are maintained [pursuant to provision to section 209(1)] Name of the company Notice is hereby given that the board of directors of the company have decided vide resolution dated the . Day of .. 19 to keep the books of accounts the company at .. (new full address) which falls under the jurisdiction of *.. with effect from .. Signature . Name (In Block Capital) Designation.. Dated the . Day of . 19 * Give the name of police station with district and tahsil.

58

FORM NO. 23AB (See Rule 7A)

Statement contenting salient features of balance sheet and profit and loss account, etc. as per section 219(1)(b)(iv) Form of Abridged Balance Sheet Name of the Company . Abridged balance sheet as at

59

Particulars

Figures at the end of Curren Previous financial t year financi al year

SOURCES OF FUNDS (4) Shareholders funds (a) Capital (i) Equity (ii) Preference (iii) Reserves and surplus (b) Reserves and surplus (i) Capital reserve (ii) Revenue reserve (iii) Revaluation reserve (iv) Surplus in profit and loss account (v) Share premium reserve (vi) Investment allowance reserve] (5) Loan funds (a) Debentures (the amount of convertible /partly convertible debentures indicating the date of conversion] (b) Public deposits (c) Secured loans (other than debentures) (d) Unsecured loans Total of (1) and (2) APPLICATION OF FUNDS (4) Fixed assets (a) Net block ------(Original cost less depreciation) (b) Capital work-in-progress (5) Investments (a) Government securities (b) Investment in subsidiary companies (i) Quoted (ii) Unquoted (c) others (i) Quoted (ii) Unquoted (6) (I) Current assets, loans and advances (a) Inventories (b) Sundry debtors (c) Cash and bank balances (d) other current assets (e) Loans and advances (i) To subsidiary companies (ii) To others

II

Less: (i) Current liabilities and provisions (a) Liabilities (b) Provisions

60

Notes to the abridged balance sheet and the abridged profit and loss account. 1 The amounts to be shown here should be the same as shown in the corresponding aggregated heads in the accounts as per Schedule VI or as near thereto as possible. 2 The total amount of contingent liabilities and that of capital commitments should be shown separately. 3 All notes forming part of the accounts as per Schedule VI to which specific attention has been drawn by the auditors or which form a subject-matter of qualification by the auditor should be reproduced. 4 If fixed assets are revalued, the amount of revaluation should be shown separately for the first five years subsequent to the date of revaluation. 5 Any item which constitutes 20% or more of the total income of or expenditure (including provision) should be shown separately. 6 Amount , if material, by which any items shown in the profit and loss account are affected by any change in the basis of accounting, should be disclosed separately. 7 If no provision is made for depreciation, the fact that no provision has been made shall be stated along with the quantum of arrears of depreciation computed in accordance with section 205(2) of the Act. 8 Market value of quoted investments (both for current year as also of previous year) should be mentioned. 9 Any noted forming part of the accounts as per Schedule VI which is in the nature of any explanation regarding compliance with any law should be reproduced. 10 Important ratio performance such as sales/total assets ratio, operating profit/capital employed ratio, return on net worth profit/sales ratio. 11 Details of installed capacity and productivity of main items manufactured should be disclosed. 12 Notes in the abridged balance sheet should be given the same number as in the main balance sheet. The above stated salient features of balance sheet and profit and loss account should be authenticated in the same manner as the main accounts are to be authenticated. Auditors report and the comments, if any, of the Comptroller and AuditorGeneral of India under sub-section (4) of section 619, in the respect of Government companies and companies under section 619B. DIRECTORS REPORT Should be given in full except the information under clause (e) of sub-section (1) and sub-section (2A) of section 217. Subsidiary company/companies-------Every holding company shall give a statement relating to its subsidiary company/companies to be furnished in pursuance of clauses (e), (f) and (g) of subsection (1) of section 212.

(Signed by Directors/Secretary in the manner prescribed in section 215(1).

61

FORM NO. 32 Registration No. of Company .......................... Nominal Capital Rs. ................................... THE COMPANIES ACT, 1956 Particulars of appointment of directors and manager and changes among them [Pursuant to section 303(2)] Name of Company ......................................... Presented by ............................................... Note : --- If a company has no particulars to be included in one or two of the headings A B and C the parts containing those headings (in respect of which the company has no particulars to be included) need not be filed. A. Appointment of and changes among directors. Name or names and surname in full 1 Fathers/ husbands name 2 Usual Nationalit residential y address 3 4 Date of appointm ent or change 5 Brief particulars of changes 6

Notes: (1) A note of changes should be made in column 6 e.g. by inserting against the name of new director, etc. the words in place of ........................ and by indicating against the name of the former director, the cause for the change, e.g. by death, resignation, retirement by rotation, disqualification etc. (2) In case of managing director, his designation should be stated with his name in columan1. B. [***] C. Appointment of and changes in managership and secretaryship. Name or Fathers/ Usual Nationalit Date of Brief names husbands residential y appointm particulars and name address ent or of surname change changes in full 1 2 3 4 5 6

Dated the .......................................... day of ..............19 Signature ............................................ Designation............................................

62

Notes: (1) For the purposes of this form, particulars of a person appointed as manager within the meaning of section 2(24) of the Companies Act, 1956 need be given. (2) A note of change as also the cause of change e,g, by death, resignation, removal, disqualification, etc. should be stated in column 6.

FORM No. 34AA Registration No. of Company... Nominal Capital Rs. THE COMPANIES ACT, 1956 Form of application (Please see section 370) Instructions 1. App1ication complete in all respects to be sent to the Secretary, Department of Company Affairs, Government of India, Shastri Bhawan, 5th Floor, "A" Wing, New Delhi- 1 1 0 00 1. 2. The application form should be accompanied by the requisite amount of fee/evidences of payment of fee paid in terms of the Companies (Fees on Applications) Rules, 1968. Fee be preferably paid by Bank Draft/Banker's Cheque in favour of the "Pay and Accounts Officer, Department of Company Affairs, New Delhi", payable at Delhi. 1. Authorised Capital of the Co. 2. Amount of fee paid Rs Rs Rs 63

3. Details of DD/Bankers' Cheque/Challan: Bank: Station: No.: Date: (As on..) Particulars 1 Lending Company(Applicant Company) 2 Borrowing Company(to the extent applicable) 3

4. Name and address 5. Existing business 6. Profit earned/Losses suffered during last 3 years 7. Management Structure and Share holding pattern 8. Among of loan proposed to be given and for what purpose 9. Rate of interest proposed to be charged 10. Nature and value of Security offered by the borrower 11. Whether there has been any default in the repayment of any deposit or part thereof or any interest thereupon in accordance with the terms and conditions of such deposit referred to in section 58A of the Companies Act, 1956. If yes, the details thereof 12. Whether the applicant Company has passed the requisite special resolution; if so, a copy of the resolution is to be attached. 13. Availability of funds with the applicant Company: As on............. Details

(to be attached along with the application)

(to be attached along with the application)

Amou nt

Remark s 64

1 (a) Subscribed capital/paid up capital) (b) (b) Free reserves (to be listed) (c) Total: (a) Existing investments (e) Loans/deposits already lent by the Company (P Amount of Loan involved in this proposal (g) Total (e +f + g) (h) Percentage of Column (g) in relation to Column (c)

Verification It is hereby certified that the information given above and in the attached documents are true to the best of my knowledge and belief

Station: Date:

Signature Designation

FORM No. 37 Registration No. of Company. THE COMPANIES ACT, 1956 Application by an existing joint stock company for registration as a limited/an unlimited company [Pursuant to sections 565, 566 and 567] 65

Name of Company . Application by(a) . for registration as a Limited Company/Private Limited Company/an Unlimited Company under the Companies Act, 1956. (a) . constituted by(b) dated the day of.19 (copy whereof is in Annexure 1 hereto) desires to register itself as a company limited by shares/company limited by guarantee/an unlimited company under the Companies Act, 1956, with the name of ..Company Limited/Company Private Limited and for that purpose delivers the documents specified in Annexures II to VI hereto for registration under the said Act. Signature Designation Dated the..day of.19

FORM No. 40 Registration No. of Company THE COMPANIES ACT, 1956 Registration of an existing company as a limited company Statement specifying certain particulars [Pursuant to section 567(c)l Name of Company . Presented by . Amount of nominal capital .. Number of shares into which it is divided and the amount of each share . Amount of stock of which it consists Number of shares or amount of stock taken up to the day of. 19. Amount paid on each share

66

Name of company. Limited/Private Limited .. Registered office Resolution declaring the amount of the guarantee.. Signature Designations Dated the.day of. 19 We.ofand being two of theof.'do solemnly and sincerely declare that the particulars set forth in the several documents accompanying this declaration are true to our knowledge in regard to the particulars..and true to the best of our information and belief in regard to the other particulars. Signature

Designation' Dated the .day of.. 19.. Not more than six clear days before delivery for registration. TO be completed by a company intending to be registered as a company limited by guarantee. State whether Directors or other Principal Officers. Insert name of company. State whether Director, Managing Director, Manager or Secretary.

1 2 3 4 5

67

FORM No. 41 Registration No. of Company.. THE COMPANIES ACT, 1956 Registration of an existing company as a limited company copy of resolution assenting to registration with limited liability [Pursuant to section 565(1) proviso, Clauses (v) and (vii) 1] Name of Company Presented by Copy/Copies of resolution/resolutions' passed at a general meeting of ....held on the day of 19. assenting to its being registered with limited liability. The resolution/resolutions' to be written, typed or printed here,). Signature Designation Dated this .day of..19 We.of andbeing two of the' of do solemnly and sincerely declare that the particulars set forth in the several documents accompanying this declaration are true to our knowledge in regard to the particulars and true to the best of our information and belief in regard to the other particulars. Signature Designation Dated the. day of ..19 1 Where a company is proposed to be registered as a company limited by guarantee there should be two resolutions, one in accordance with section 565(1) proviso, clause (v) and the other in accordance with section 565(1) proviso, clause (vii) of the Companies Act, 1956. 2 State whether Director, Managing Director, Manager or Secretary. 3 State whether Directors or other Principal Officers. 4 Insert name of company.

68

FORM No. 60 Registration No. of Company F THE COMPANIES ACT, 1956 Memorandum of complete satisfaction of charge' created by a foreign company [Pursuant to section 600 read with section 1381] Name of Company Presented by 2 a company incorporated in3 and which has established a place of business/a principal place in India at hereby gives notice that the registered charge being4 of which particulars were registered with the Registrar of Companies, on the day of 19 was satisfied in full on the day of 19 . the debts for which the charge was given having been paid or satisfied. In witness thereof the common seal of the company was hereunto affixed this day of 19
Signature or signatures of one or more persons. authorised under section 592(1)(d) of the1 Companies Act, 1956 or of some other person in India, duly authorised by the company

Dated the day of..19 1. Charge" includes "a mortgage" - see section 124. 2. Name of the company. 3. Country of origin. 4. A description of the instrument(s) creating or evidencing the charge, e.g. "Mortgage","Charge", "Debenture" etc., with the date thereof should be given. If the registered charge was a "Series of Debentures or Debenture Stock", the words "authorised by resolution", together with the date of the resolution should be added.

69

BIBLIOGRAPHY

WWW.VAKILNO1.COM WWW.NETLAWMAN.CO.IN

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