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INTRODUCTION
Cherished child of English parents
First passed in India in 1850 First amendment in the year 1857 Amended several times later

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THE COMPANIES ACT 1956

Came into force on 1st april 1956
Based largely on the recommendations of company law

committee (Bhabha committee) Largest piece of legislation (658 sections and 15 schedules)

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FEATURES
Full and fair disclosure of various matters in the

prospectus Detailed information of financial affairs of the company to be disclosed in its accounts Provision for intervention and investigations by the government into the affairs of the company

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FEATURES (Contd)
Restrictions on powers of managing agents and other

managerial personnel Enforcement of proper performance of their duties by company management Protection of minority shareholders

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FORMATION OF COMPANY
Documents to be filed
MOA (Memorandum Of Association) AOA (Articles Of Association) A statement of the normal / authorized capital A notice of address of the registered office of the

company List of directors* An undertaking* A declaration

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FORMATION OF COMPANY ( contd )

Certificate of Incorporation Certificate of Commencement of Business Promoter
Preliminary or Pre-Incorporation contracts Provisional contracts
Liability of Promoters Remuneration of Promoters

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KINDS OF COMPANIES
BASED ON MEMBERSHIP
Private Company

-Min no. of members: 2 -Max no. of members: 50 -Restricts right to transfer its shares -Prohibits public issue of shares or debentures Public Company -Min no. of members: 7 -Max no. of members: Unlimited -Doesnt restrict right to transfer its shares -Doesnt Prohibit public issue of shares or debentures
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KINDS OF COMPANIES ( contd)

BASED ON INCORPORATION Chartered companies -companies which are incorporated under a special charter granted by the king or queen in exercise of royal power. -East India Company(1600) Statutory Companies -which are created by special act of parliament or state legislature at central or state govt. level -Reserve Bank of India Registered Companies are companies which are registered under the co.s act of 1956

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KINDS OF COMPANIES ( contd)

BASED ON LIABILITIES Co.s limited by SHARES companies in which the liability of its members is limited to the extent of the amount unpaid on the shares held by a particular member. Co.s limited by GUARENTEE -the liability of members is limited to a fixed amount which members undertake to contribute to the assets of the company in case of its winding up. Unlimited Co.s wherein members are liable for the debts of the company irrespective of their interest in the company
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 BASED ON CONTROL

A) B)

Holding Company -51% of the share capital Subsidiary Company less that 51% Govt. Companies MNTC, ONGC Foreign Companies IBM, MICROSOFT

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PUBLIC CO.

VS.

PRIVATE CO.

Number of members Commencement of business Invitation to public Transferability of shares

Number of directors
Statutory meeting Restrictions on appointment of directors

Managerial remuneration
Further issue of capital

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PARTNERSHIP
Registration
Number of members Legal status

VS.

COMPANY
Liability
Creditors Dissolution on death

Property
Contracts Management Life duration

Agency relationship
Transfer of interest Statutory obligations

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MERGERS AND ACQUISITIONS

MERGER:

Combination of two companies to form new company or to run business under any one of the merging companies name. Eg.:1. NBC Universal; NBC and Vivendi Universal Entertainment 2. US Airways; with America West Airways 3. Sony Ericson; Sony and Ericson 4. NSN; Nokia and Siemens

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 ACQUISITION:

Purchase of one company by another with no new company being formed. Eg.:1. P&G buys Gillette 2. Tata steel acquires Corus 3. Google buys Youtube 4.Vodafone acquires Hutch

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MOTIVES AND BENEFITS OF M&A

Economies of scale
Improved market reach Reduction in Tax liability

Diversification of risk
Limit competition Eliminating the financial constraints Synergy

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TYPES OF MERGES
Horizontal merger
Vertical merger Market-extension merger

Product-extension merger
Conglomerate merger

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M&A -ITS FINANCING

All Shares Deals
Cash Hybrids

DEMERGER/SPIN-OFF/SPIN-OUT: -Effective opposite of a merger -One Co. splits into two

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