NATURE AND KINDS OF COMPANIES Company:
Section 3(1)(i) of the companies act says that “a company means a company formed and registered registered under this act or an existing company” . Salient Features of a Company: 1. 2. 3. 4. 5. 6. 7.
Separate Legal Entity: Limited Liability of Members: Perpetual Succession: Common Seal: Separate Property Ownership: Transferable Shares: Capacity To Sue and Being Sued.
TYPES OF COMPANIES: Private Company: A private company is one which by its Articles: 1. Restrict Restricts s the right right to transf transfer er its its shares. shares. 2. Limits Limits the number number of members to fifty, fifty, excludin excluding g the employees employees and ex employe employees, es, 3. Restricts the subscription of shares shares or debentures debentures from general public [sec-3 [iii]]. Public Company: Company : A public company is one, which is not a private company. Thus, if the articles do not provide the aforesaid three restrictions, it shall be a public company. A public company requires a minimum seven number and there is no limit on the maximum members. The shares and debentures of a public company are quoted on a stack exchange and are freely transferable. transferable. Other Types Of Companies Under The Act Within the private and public categories, there are certain types of companies which are either public or private companies for example there are Government companies, Charitable companies companies,, Finance Finance companies companies,, Companie Companies s without without share share capital, capital, Guarant Guarantee ee companie companies, s, Holding/Subsidiary Holding/Subsidiary companies etc. 1. Holding and subsidiary subsidiary companies. 2. Group and associate companies. 3. Deemed Deemed public public companie companies s (Sec 43 a company). company). 4. Governme Government nt and and Publi Public c Sector Sector companie companies. s. 5. Charitab Charitable le and non-pr non-profit ofit makin making g organisa organisations tions.. 6. Nidh Nidhii Com Compa pany ny.. 7. Compan Company y Limite Limited d by Guar Guarant antee. ee. 8. Inve Invest stme ment nt Com Compa pany ny.. 9. Unlimi Unlimited ted Liab Liabili ility ty Compa Company ny.. 10. Statutory Statutory Company Company 11. FERA Company. Company. 12. Foreign Company. 13. Non Banking Financial Financial Company. Company.
FORMATION RMATI ON OF O F A COMPANY COMPA NY
It is very easy to start a company. All that you need is two persons to start a private company and minimum minimum of seven seven persons persons to start a public company. company. It is important to note that even existing ‘companies’ can join others in starting a company, because a company is also a ‘person’ for all practical purpose. The persons who start a comp compan any y are are call called ed ‘pro ‘promo mote ters rs’’ and and the the proc proces ess s of star starti ting ng a comp compan any y is call called ed ‘incorporation’. Steps for Incorporation Of A Company
1. NAME 2. MEMORANDUM & ARTICLES OF ASSOCIATION 3. ARTICLES OF ASSOCIATION 4. PREPARATION OF OTHER DOCUMENTS FOR INCORPORATION: 5. CERTIFICATE OF INCORPORATION 6. COMMENCEMENT OF BUSINESS
MEMORANDUM OF ASSOCIATION According to section2(28) of the act “memorandum means the memorandum of association of a company as originally framed or as altered from time to time in pursuance of any previous company laws or of this act. A memorandum contains the following clauses:
1. 2. 3. 4. 5. 6. 7. 8.
Name Clause Registered Office Clause Object Clause Liability Clause Capital Clause Association Stamp Duty And Witness Doctrine Of Ultra Vires
Alteration procedure for memorandum of association
1. 2. 3. 4. 5. 6. 7. 8.
Alteration of Name Clause Alteration of Registered Office Clause Alteration of Object Clause Alteration of Liability Clause Alteration of Capital Clause Alteration of Association Alteration of Stamp Duty And Witness Alteration of Doctrine Of Ultra Vires
ARTICLES OF ASSOCIATON Articles usually provide for the following matters: 1. Excl Exclus usio ion n who wholl lly y or or in in apa apart rt of Tabl Table e A. A. 2. Comm Common on Seal Seal,, Its Its use use and and safe safe cust custod ody. y. 3. Alte Altera rati tion on of Capi Capita tall - how how and and to what what exte extent nt.. 4. Barr Barrow owin ings gs - the the mode mode and and the the limi limit. t. 5. Gener General al Meeti Meetings ngs - notic notice e requir required, ed, reso resolut lution ions, s, voting voting righ rights, ts, prox proxies ies etc. etc. 6. Dire Direct ctor ors s - thei theirr appo appoin intm tmen ent, t, qual qualif ific icat atio ion, n, remu remune nera rati tion on,, powe powers rs,, duti duties es and and removal, names of first directors, minimum and maximum number of directors. 7. Divi ividend dends s an and res reser erve ve fun funds. 8. Accounts and audit. 9. Mana Manage gerr or sec secre reta tary ry - app appoi oint ntme ment nt and and rem remun uner erat atio ion. n. 10. Ad Adopt option ion of of contra contracts cts ente entered red in to to the promot promoters ers.. 11. 11. Remu Remune nera rati tion on to prom promot oter ers s. 12. Specia Speciall prov provisi isions ons for amalg amalgam amati ation. on. 13. Winding up up.
