Corporations Law

Section A
 CHARACTERISTICS OF
COMPANIES
Artificial legal person with rights and
powers of its own
Separate legal entity – independent of
people that control or run the entity
Can sue and be sued in its own name
Perpetual succession - lifespan of the
company is not affected by the death of it
members or officers
Can hold and dispose of property
 Kinds of Company
Statutory Companies…. Special acts e.g
RBI
Registered Companies ..
Classification on the basis of
liability
Company limited by share Sec 12(2)a
Company limited by guarantee Sec 12(2)b
Company with unlimited liability Sec
12(2)c
 Classification on the basis of
Members

Private company “close corporation”

Sec 3 (1) (iii)

Restricts right to transfer shares

Members from 2 to 50
Prohibits invitation to public for share/
Debenture.
 Public Company
does not restrict to transfer its shares
Members from 7 to unlimited
Can invite public for its shares/
debentures.
Consequences of the Separate
legal entity doctrine
Corporate capacity – campany can do most
things that a natural person can do
The companies obligations and liabilities are its own
and not those of its participants
A company can sue and be sued in its own name
Perpetual succession – continues until it is
wound down and deregistered irrespective of
changes in its participants
A company’s property is not the property of its
participants
A company can contract with its own
controlling participants
 Formation of the Company
Documents to be filled with registrar
Certificate of incorporation
Effect of Registration takes place
 TOPICS
Memorandum of Association

Articles of Association
 MOA
Defines the legitimate objectives of a
company.

Identifies the nature and structure of the

company.
Allows for limited liability to be created.
 AOA
Rules and regulations
contained for the operation of
the company.

It is a contract between the

members of the company and
the company where the
members are seen as one party
and the company is the other.
Memorandum of Association
MOA
Deals with the following issues:
Name of Co
Registered Office of the Company
Objects
Nature of Co i.e. Ltd
Nominal Share Capital and Par Value
Articles of Association (AOA)
These are much longer
These are the internal rules for the
Company
There is no mandatory content
You can address those issues here that
you choose
And you can provide the rules that you
choose
Intra Vires

Ultra Vires
 SHARES
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 Prospectus sec 2(36)
Inviting offers from public for purchasing
shares or debentures of a company is
prospectus
Statement in lieu of prospectus
Where a company arranges money from
private source it need not issue
prospectus but promoters are required to
to prepare a draft known as “statement in
lien of prospectus”
 Minimum Subscription
A company making any issue of shares/
debentures to the public must receive
90% subscription against the entire issue .
Management of the company
The persons through whom a company acts and
does its business are termed as directors. They
collectively called board of directors
Definition Sec 2 (13)
– Any person occupying the position of director,
by what ever name called
– May be defined as any person who having
control over direction , conduct, mgt of the
company affairs
Only individual can be director
Number of directors???
First directors
Appointment of directors Sec
255
In case of public company or private which
is subsidiary of a public company not less
than 2/3rd of total directors must be
appointed in annual general meeting.
These directors are liable to retire by
rotation
Remaining 1/3rd in case of such company
are subject to any Regulation in the
Articles, also to be appointed in annual
general meeting
 Other appointments

By board of directors
By third party
By direction of central government
Company Meetings
 Meeting
May be defined as coming together of at
least a quorum of members in order to
transact either the ordinary or special
business of the company.
Kinds of Company Meetings

I. Meeting of share holders

General Meeting which includes:
 Statutory Meeting
 Annual general Meetings
3. Extraordinary meeting

Class Meetings:
 II. Meeting of creditors and
debentures-holders
During the life time of the company

At the time of winding up of the

company.
 Meeting of Directors
Meeting of the Board of directors; and
Meeting of committees of directors
 Statutory Meeting Sec. 165 {Meeting of
Share holders}

The first meeting of the share holders of a public

company is known as a statutory meeting. It has to
be called with in six months from the date on which
the company is entitled to commence business, but
it cannot be held within one month from that date,
Sec.165
Statutory Report [Sec. 165(2)]The directors are
required to prepare and to send to every share
holder a document containing fullest information on
important matters known as statutory report”.

Refrences:..........Company Laws Avtar

Singh
 Annual General Meeting
[Sec.166]
Every Company is required to call at least
one meeting of its shareholders each year
called Annual General Meeting
The first with in 18 months
No meeting necessary for year of
incorporation
Gap between two annual meeting should
not be of more than fifteen months.
Extraordinary General Meeting [Sec
169]
All general meetings of a company other
than annual general meetings are called
extraordinary meetings
They are held when it found necessary to
transact certain business
Example alteration of MOM
Increase/Decrease in share
capital etc.
 II Class meetings Sec106
Meeting of different classes of share
holders
 Winding up of company
Modes
2. Winding up by the court
3. Voluntary winding up ….
– Members voluntary winding up
– Creditors voluntary winding up
Winding up subject to supervision of the
court.