COMPANIES ACT 1956

Company formed and registered under the act or any of the previous laws (Company Laws)

Features of the company

1.incorporated or registered 2.Artificial person 3.A legal entity 4.liability 5.Separate property 6.Trasferability of the share 7.Perpetual succession 8.Common seal use of seal outside the India But the place should also be mentioned- A company being an artificial person , can act only through the natural person .

 9.Company may be sue and to be sued by its own name

Difference
Reason Private Public Members Paid up capital 1 lakh 5 lakh No Prospectus No Deposit From The Public Certification of the incorporation is enough to start the business. No statuary meeting Director by single resolution Not required to retire by rotation (AT LEAST TWO THIRD SHOULD RETIRE BY ROTATION IN PUBLIC COMPANY

 He no of Director may increase by any extent but in case of the public company if more then 12 then approval of the central govt. Quoram is 2 in the case of the private company and 5 in case of the public company

Special privileges and exemptions available to the Private company

1.only 2 2.without waiting minimum subscription 3.not required to issue the prospectus 4.can commence the business immediate after the incorporation . 5.not required to hold the statuary meetings 6.quoram -2 Members

 All the directors may be appointed by the single resolution Need not to be retire by rotation

Loss of privilege by Private company

Section 43 provides that if private company contravene any of the four condition included in the Article as per section 3 (1)(iii) then , it will be treated as if it is public company and it will result to the loss of privileges and exemption to which it is normally entitled to .

Corporate veil
Legal concept that separates the personality of acorporation from the personalities of its stockholders(shareholders), and protects them from being personallyliable for the firm's debts and other obligations.

Corporate veil
1.Piercing (Painfull)the corporate veil Thisprotection, however, is not ironclad or impenetrable. Where a court determines that a firm's business was not conducted in accordance with the provisions of corporatelegislation (or that it was just a faade for illegal activities) it may hold the stockholders personally liable for the firm's obligations under the legal concept of 'lifting (or piercing) the corporate veil. 2.Defective incorporation 3.Improper Signing of the agreement

Illegal association
Sec-11 Of the companies act 2=10 2=20 2=50 2-unlimited Association for non profit is excluded Joint Hindu family is also excluded

Effects of an illegal association

1.Every member is personally liable 2.punishable with the fine of 10,000. 3.Such an association can not enter into any kind of contract 4.can not sue on any of its members or any outsider . 5.The profit may be an illegal association, are however , liable to assessment of income tax .

Types of the companies

A- a company may be a charted company a statuary company B a registered company with unlimited liability-limited liability C A Company may be limited by Shareguarantee by share and guarantee D-Private and Public

Deemed Public company

-Companies Amendment act -1960 43-a THE COMPANIES AMENDMENT ACT 2000 The object was to check the misuse of private companies . The private companies were conferred certain privileges and exemption under the companies act 1956, unscrupulous managements incorporated their companies as a private companies but employed substantial public funds .

Conversion of the Private company into a Public company

1.General meeting passing the Special resolution 2.if no. below then then 7 then make it 7 and director -3 Private-deleted limited inserted Within 30 days apply to the registrar

Public company in to private company

1.general meeting special resolution 2.approval of the central GOVT 3.Approval should be submitted to the registrar 4.private should be added before the limited 5.within 30 days the registration to the registrar

Holding and the subsidiary company

Where a company control over other company is known as holding company and company over which control is exercised is called as the subsidiary company . A company is deemed to be control on other The other control the composition of the board of the directors

 The other company holds more then half in the nominal value of its equity share capital those share holders enjoys the voting right If the company is subsidiary of any other company

One man company

A member may hold the virtually the entire share capital of a company .Such a company is known as a one man company.This can happen in both the company Public as well private .

Formation of the company

Promotion Promoters Registration- 1.Memorandum 2.Article if any 3.Or any other agreement Availability of the name Certificate of incorporation Flotation ready to move or raisin g the capital Certificate to commence the business

Pre incorporation and provisional contract

Public company Contracts before incorporation Contract after incorporation but before obtaining the certificate of the business Contract after both

Private company
Contract before the incorporation Contract after the incorporation

Liability of the promoters

Before the act of the Specific Relief Act1963 it was very difficult .

Topics to be studied in the companies act

1.Memrandum Of association 2.Article of the association 3.Prospectus 4.Meetings 5.Directors

Questions
Que-1 The privileges or exemptions given to the private company are not the privileges but the characteristics of the private company ? Que-2 as per your understanding differentiate the public company and the Government company ?

Memorandum of association
Fundamental condition Object Going over then the object ultravirus

Clauses under memorandum of association

Name clause The registered clause The object clause Liability Clause The capital clause The association clause

Name clause
-Limited It should not be undesirable Use of words INFOSYS , SOFTWARE,SYSTEM ,INFOSYSTEM

Use of certain Key words as the Part of the name

Corporation -5crore International , global universal, continental, Intercontinental ,Asiatic,Asia, being first world -1 Crore If any of the words in the mid- 50lakh Hindustan IIndia Bharat -50 lakh In mid -5 lakh Industry/ udyog-1 crore Enterprise, Products,Business,Manufacturing -10 lakh

Object Clause
1.Main object 2.ancillary object 3.Other object

Alteration of the object clause

To carry the business more economically and efficiently To attain its main purpose by new or improved one To enlarge or change the local area To restrict any object To sell or dispose any part of the business