Companies Act by Rajat Jhingan

8/4/2019 Companies Act by Rajat Jhingan

1/23

Company Law1

Companies Act

Term I I I

P G D M F T

( 2 0 0 8 2 0 1 0 )


2/23

Company Law 2

G r o u p

I s t

N a m e

R a j a t J h i n g a n


3/23

A g e n d a :

W h a t i s a C o m p a n y ?

Type s of C ompani e s.

T h e P r o m o t e r s .

D i re ct ors i n a C ompany.

T he Share hold i ng Pat t e rn.

Company Law 3

Companies Act


4/23

Definition of a Company: It mean an association of individuals formed for

some common purpose.

It is an artificial person created by law , with a fixedcapital, divided into transferable shares, with

perpetual succession and common seal.

Company Law 4


5/23

As defined in Companies Act 1956, Section 3

(1) (i) and (ii): A company formed and registered

under this Act or an existing company. An existing

company means a company formed and registered

under any of the former Companies Act

A voluntary incorporated association which is anartificial person, created by law with limited liability

having common seal and perpetual succession

Company Law 5


6/23

Company Law 6

Company : Characteristics

Separate Legal Entity.

Limited Liability.

Perpetual Succession.

Common Seal.

Transferability of Shares.

Capacity to Sue.


7/23Company Law 7

Classification ofCompanies

On the basisof

Incorporation

On the basisof Liability

On the basisof number of

Members.

On the basisof Control.

On the basisof Ownership.

Classification of Companies.


8/23Company Law 8

Classification (Contd.)

On the Basis of INCORPORATION.

1. Statutory Companies.

2. Registered Companies.

On the basis of LIABILITY.

1. Limited by Share.

2. Limited by Guarantee.

3. Unlimited Liability.


9/23Company Law 9


On the Basis of MEMBERS:

1. Private Companies.

2. Public Companies.

On the basis of CONTROL

1. Holding Company.

2. Subsidiary Company.


10/23Company Law 10


On the Basis of OWNERSHIP:

1. Government

2. Non Government.


11/23

Promoters.

1. Promotion

2. Legal position of promoters.3. Promoters Liability.

4. Promoters remuneration.

5. Pre-incorporation contract.

Company Law 11


12/23

D i r e c t o r s : D e f i n i t i o n

Sec. 2 (13) defines director as any person occupying the

position of authority to act on behalf of the company

The directors of a company are collectively known as board ofdirectors'. On the analogy of the representative form of

government, they are elected representatives of shareholders.

Company Law 12


13/23

Appointmentof Directors

First Directors

Appointment by the company.

Appointment by the directors

Appointment by third parties.

By proportional representation.

By the central government.

Company Law 13


14/23

As agents

As employees.

As officers

As trustees.

Positionof

directors:

Company Law 14


15/23

Disqualifications of Directors.

Unsound Mind.

Undischarged Insolvent Applied to be adjudicated.

Convicted by Court.

Calls in respect of shares, been in arrear . Sec. 203 : Fraud or misfeasance.

All ready a director of a public company.

Company Law 15


16/23

S H A R E S Definition: A share is an interest of a shareholder in a company. The

capital of a company is divided into certain indivisibleunits of a fixed amount called shares.

an interest having a money value & made up of diverse

rights specified under Articles of Association

It includes stock except where a distinction between astock & a share is expressed or implied. [ Sec.2 (46)]

Company Law 16


17/23

SHARES

A share is evidenced by a share certificate.

[Sec. 84] Each share is distinguished by appropriate

number. [Sec. 83]

A bundle of rights and obligations.

Company Law 17


18/23

Shares StocksHave a nominal Value Have no nominal Value

May not be so. Always full paid up.

Equal denomination. Can be of Unequal Denomination.

Directly issued to the public. Cannot be issued directly.

Transferable in whole numbers. Transferable is small fractions

Always bear a distinctive number. Fractions does not bear distinctivenumber.

Company Law 18


19/23

Equity Shares[Sec 85 (2) ]

With reference to any company limited

by shares.Sweat Equity Shares.

Preference Shares

[ sec 85 (1)]Have Preferential right to be paiddividend during the life time of a

company.

Preferential right to the return ofcapital when the company goes into

liquidation.

Company Law 19


20/23

Preference Shares (Types)

Cumulative Prefrence Shares

Non-Cumulative prefrence shares.

Participating prefrence shares.

Non participating prefrence shares.

Convertible prefrence shares. Non-Convertivle prefrence shares.

Redeemable prefrence shares. [Sec. 80]

Company Law 20


21/23

Application & Allotment of Shares

1. Minimum subscription [Sec. 69 (1) ].2. Application Money [ Sec 69 (3) to (6) ].

3. Effect of irregular allotment [ Sec. 7].

4. Opening up of subscription list [ Sec. 72].

5. Shares and debentures to be listed on stock exchange [Sec 73].

6. Return as to allotments [Sec 75].

Company Law 21


22/23

Buy-back of shares.

[Sec. 77-A]

Company is allowed to purchase its own shares from:

Its free reserves.

Securities premium account.

Proceeds of earlier issue.

Conditions for buy back.

Authorized by its Articles. Resolution passed in its general meeting.

Must not exceed 25 % of reserves.

Must be listed on stock exchange and regulated by SEBI.

Company Law 22


23/23

Company Law 23

Documents

Companies Act by Rajat Jhingan