Indian Companies Act 1956

7/31/2019 Indian Companies Act 1956

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PRESENTED BY:

GROUP: 9

AMISHA RADHANPURA B 114205

DIGVIRAJ SINGH B 114214

MEET THAKKER B 114229

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Definition

Various types ofcompanies

Formation of

company

Winding up ofcompany


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Company : [section 3(1)]

Formed & registered under thecompanies Act

Any existing company established underany previous Act.


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The Companies Act is a successor to the

Indian Companies Act of 1913 and is aconsolidation of many successiveAmendment Acts, statutory rules andprinciples laid down in decisions of the

courts in India and England.

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Company is an artificial person

It is considered as a separately legal

entity for the purpose of law.


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Incorporated Association

Artificial Person

Separate Legal Entity

Limited Liability

Transferability of Shares

Perpetual Existence Can own and sell property

Common Seal Company may sue and be sued inits own name

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There are many types of company

depending upon the Difference in the

objects of it.


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Types of Company

Incorporation Liability Control

CharteredCompany

RegisteredCompany

Statutory

Company Private

Limited by shares Limited By Guarantee Unlimited Company

Public Private

Govt. orNon. Govt.

Holding &Subsidiary

Foreign or

Domestic

Public


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Chartered Company

A Company incorporated under a special charter granted by the

Queen of England is called CharteredCompany.

The Company is regulated by its Charter and Companies Act

does not apply to this kind of company.

The Charter also prescribe the nature of Business and the power

of the Company.

Examples : East India Company and Bank Of England


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Statutory Company

A Statutory Company is one which is created by a Special Act of

Parliament or a state legislature.

For achieving the purpose of public utility.

The nature and the power of such companies are laid down in the

special Act under which they are created. Memorandum of Association is not required.

Not required to Use limited after its name.

Examples : RBI, UTI, LIC, State Bank of India.


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Registered Company

A Registered Company is one which is registered in accordance

with the provisions of the Companies Act, 1956 and includes the

existing Companies formed under any other law.

Comes into existence by receiving the certificate of Incorporation.

Governed by the Companies Act ,1956.

Registered Company may be PRIVATE OR PUBLIC COMPANY.


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Private Company

Section 3(1)(iii): A Private Company means a company which has a minimum

paid up capital of Rs. 1,00,000/- or such higher paid up capital

as may be prescribed by its articles

Restrict the right to transfer its shares, if any;

Limits the number of the member to fifty,

Prohibits any invitation to the public to subscribe for any

shares in or debenture of the company.

Prohibits any invitation or acceptance of deposits from

persons other than its members, directors or its relatives.


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Section 3(1)(iv): Public company means a company which is Either

not a private and has a minimum paid-up capital of

Rs. 5,00,000 or such higher paid-up capital as may

be prescribed;

Is a private company which is a subsidiary of

public company.

Public Company


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There is no restriction on the number of members. However, themaximum number of members depends upon the number ofshares allotted.

Public company may be

a) A company limited by shares

b) A company limited by guarantee

c) An unlimited company. In case a public company is a limited company, then it must add

the word Limited at the end of its name.

It must have minimum at least 7 members.

It must have at least 3 directors.

Public Company


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Company not for Profit

According to Section 25, the Central Government may bylicense grant that an association may be registered as acompany with limited liability, without using the words limitedor pvtltd as a part of its name.

An association must satisfy the following condition;a) The association about to be formed as a limited company aims at

the promotion of commerce, art, science, religion, charity, or anyother useful objective ;

b) It intends to apply its profits, if any, for promoting its objects; and

c) It prohibits the payment of dividend to its members.

Central Govt. has a power to revoke the license of such company.


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Limited by shares [Section 12(2)(a)]

A company limited by shares is a company in which the liabilityof its members is limited by its Memorandum to the amountunpaid on the shares respectively held by them.

It may either public or private Company.

If member of the company pays a full amount on shares thenhis liability would be nil.

Features:

The liability of its members is limited up to the amountremaining unpaid on the shares held by them.

Such liability can be enforced either during the lifetime orduring the winding up of the company.


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Limited by Guarantee [Section 12(2)(b)]

A company in which the liability of its members is limited by itsMemorandum to such amount as the members may respectivelyundertake to contribute to the assets of the company in theevent of its being wound up.

For the purpose of Commerce, science, art, religion, charity orany other useful objects.

Features:

The liability of its members is limited up to the amountGuaranteed by them.

Such liability can be enforced only after the commencement ofwinding up of the company and not during the lifetime of it.


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Unlimited Company [Section 12(2)(c)]

A company in which the liability of its members is limited by itsMemorandum to such amount as the members may respectivelyundertake to contribute to the assets of the company in theevent of its being wound up.

For the purpose of Commerce, science, art, religion, charity orany other useful objects.

Features:

The liability of its members is limited up to the amountGuaranteed by them.

Such liability can be enforced only after the commencement ofwinding up of the company and not during the lifetime of it.


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Government Company [Section 617]

A Government company means any companyin which at least 51% of the paid up sharecapital is held by the Central Government or byany state Government.

Even a subsidiary company of Government isregarded as a government Company.

Example: Indian telephone Industries,

Hindustan Aeronautics Ltd.


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Non - Government Company

A company which may not be termed as

a a government company as defined in

section 617 is regarded as a non Government company.


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Foreign Company

A company which is incorporated outside Indiaunder the law of that country is known as a ForeignCompany.

After the establishment of Business in India, the followingdocuments must be filed with the Registrar of companies within30 days for the date of establishment.

i. A certified copy of the charter or statutes under which the company isincorporated

ii. The full address of the registered office of the company.

iii. A list if directors & secretary of the company.

iv. The full address of the companys principal place of business in India.


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Domestic Company

A company which cannot be termed as

foreign company under the Provisions of

the Companies Act should be regarded

as a Domestic company.


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Holding & subsidiary Company

If one company controls over the anothercompany, the controlling company may betermed as a Holding Company and companyso controlled may be termed as SubsidiaryCompany.

Section 4(4) of the act defines a holdingCompany as a Company shall be deemedto be the holding company of another, if thatother is its subsidiary.


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Public Financial Institute

The Central Government by notification in the officialGazette is empowered to specify any other institutionas public Financial Institutions if:

a) It is constituted under any Central Act or is held orcontrolled by the Central Government.

b) Not less than 51 percent of its paid up Capital iscontrolled or held by the Central Government.


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Public Financial Institute

Under Section 4A of the Act, following institution aredeemed to be Public Financial Institutions:

1. The Industrial Credit and Investment Corporation of IndiaLtd.

2. The Industrial Financial Corporation of India.

3. The Industrial Development Bank of India.

4. The Life Insurance Corporation of India.

5. The Unit Trust of India.

6. The Infrastructure Development Finance Company Limited.


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Multi national Companies

A Multinational Companies is hugeOrganisation which

a) Operates in more than one country.

b) Carries out production, marketing and researchactivities on international scale in those countries

c) Attempts to maximize profit world over.


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Company comesexistence when anumber of personscome together withan intention to do

some business.These persons arecalled promoters

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Getting the company registered

Submitting documents to the Registrar

Drawing up of Articles of Association

Drawing up of Memorandum of Association

Location of registered of the company

Name for the company

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A company registered under Companies Act can cease toexist by any one of the following legal methods:

If a company transfers its undertaking(s) to anyother company under a scheme ofreconstruction or amalgamation.

The name of a defunct company may beremoved from the register of companies ofregistrar

A company may be wound up under Part VII ofthe Companies Act.

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There are two principal modes of winding up of a


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There are two principal modes of winding up of acompany:

Voluntary wind up

Compulsory wind up

A declaration of insolvency by the

Board at its meeting is necessaryfor Voluntary wind up of acompany by its members.Voluntary wind up may be:o At the instance of membersor creditors oro Under the provision of court

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A company may be wound up by court, if the company:

By special provision resolved that it be woundby court

Made default in delivering the statutory reportto the registrar or in holding the statutorymeeting

Does not commence its business within a year

from date of its incorporation

Number of members is reduced; less than 2 incase of private company and less than 7 incase of public company

Unable to pay debts31


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Indian Companies Act 1956

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