Professional Documents
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Company
ContactNo.9331963835,9239521128,9433352926.
*CSKUMARCHANDRAMOHAN*CSPUJAMOHAN*
(SpecialisedinCA,CS,CWACoachingFoundation/Executive)
RealStudyCentre,148/14,N.S.C.BoseRoad,NearTollygungeMetroStation,Kolkata40.
KUMARLAWCLASSES
SupplementaryNotesCompanyLawForDecember,2012Exam
Partnership
Acompanyisadistinctlegalperson.
partnersjointlyandseverally.
Membersofacompanyarenotitsagents.
Partnersaretheagentsofthefirm.
AmemberofacompanycancontractwithhisCompany.
Apartnercannotcontractwithhisfirm.
Company
HinduJointFamilyBusiness
Acompanyconsistsofheterogeneous(variedordiverse)members.
HUFconsistsofhomogenous(unvarying)memberssinceitconsists
ofmembersofthejointfamilyitself.
Company is an artificial person and is formed and registered by HUFiscreatedbytheoperationoflaw.
complying with the prescribed formalities prescribed under the
CompaniesAct.
A person becomes member of a company by acquiring share and A person becomes a member of Joint Hindu Family business by
whosenameisenteredintheRegisterofMembers.
virtueofbirth.
Registrationofacompanyiscompulsory.
Noregistrationiscompulsoryforcarryingonbusinessforgainbya
HinduJointFamilyevenifthenumberofmembersexceedstwenty.
Company
Corporation
Company
LimitedLiabilityPartnership(LLP)
ContactNo.9331963835,9239521128,9433352926.
*CSKUMARCHANDRAMOHAN*CSPUJAMOHAN*
(SpecialisedinCA,CS,CWACoachin000000000gFoundation/Executive)
RealStudyCentre,148/14,N.S.C.BoseRoad,NearTollygungeMetroStation,Kolkata40.
KUMARLAWCLASSES
SupplementaryNotesCompanyLawForDecember,2012Exam
beforebeingappointedasaDirectorofanycompany.
appointedasaDesignatedPartnerofLLP.
MinimumtwoforprivateCompany andminimumsevenpersonsare Minimumtwopartners arerequiredfortheformationofaLLP.
requiredforpubliccompanyaspertheCompaniesAct,1956.
Maximum 50 in case of Private Company and Unlimited number of Nocapofmaximumnumberofitspartners.
memberinPublicCompanyaspertheCompaniesAct,1956.
PrivateCompany
PublicCompany
IncaseofPrivateCompany,Minimum2membersandMaximum50
members.
The name of a Private company must end with the word Private
Limited.
InaPrivatecompany,therighttotransferthesharesisrestrictedby
thearticlesofassociation.
A private company can commence its business soon after obtaining
thecertificateofincorporation.
IncaseofPublicCompany,Minimum 7membersandnoMaximum
limitofmembers.
ThenameofaPubliccompanymustendwiththewordLimited.
APrivateCompanymusthaveatleast2Directors.
ThesharesofaPublicCompanyisfreelytransferable.
APubliccompanycancommencebusinessonlyafterobtainingthe
certificate of incorporation as well as the certificate of
commencementofbusiness.
A PublicCompanymusthaveatleast3Directors.
CompanyLimitedbyShares
CompanyLimitedbyGuarantee
Acompanyinwhichtheliabilityofitsmembersis determinedonthe
basisoftheamount,ifany,remainingunpaidontheshareISheldby
themistermedasacompanylimitedbyshares'.
Theliabilityofthemembersislimitedtothe extentofnominalvalue
ofsharesheldbythem.
HoldingCompany
SubsidiaryCompany
DefinedunderSection2(19)oftheCompaniesact.
DefinedunderSection2(47)oftheCompaniesact.
Holding Company means a holding Company within the meaning of ACompanyshallbedeemedtobeasubsidiaryCompanyofanother
Section4oftheCompaniesact.
if,thatothercompanyholdsmorethanhalfofthenominalvalueof
itsequitysharecapitalorcontrolsthecompositionofitsBoardorit
is a subsidiary company of any company which is subsidiary
companyoftheothercompany.
MemorandumofAssociation
ContactNo.9331963835,9239521128,9433352926.
*CSKUMARCHANDRAMOHAN*CSPUJAMOHAN*
(SpecialisedinCA,CS,CWACoachingFoundation/Executive)
RealStudyCentre,148/14,N.S.C.BoseRoad,NearTollygungeMetroStation,Kolkata40.
KUMARLAWCLASSES
SupplementaryNotesCompanyLawForDecember,2012Exam
ArticlesofAssociation
MOA is the charter of the company and defines the scope of its
activities.
MOA cannot be altered except in the manner and to the extent
providedbytheact.
MOAisasupremedocumentofthecompany.
ShelfProspectus
InformationMemorandum
ItisdefinedunderSection60AoftheCompaniesact,1956.
'Shelf Prospectus' means a prospectus issued by any financial
institutionorbankforoneormoreissuesofthesecuritiesorclassof
securitiesspecifiedinthatprospectus.
A Company filing a Shelf Prospectus with the Registrar shall not
requiretofileprospectusafreshateverystageofofferofsecurities
byitwithinaperiodofvalidityofsuchprospectus.
ItisprovidedunderSection60BoftheCompaniesact,1956.
A public company making an issue of securities may circulate
information memorandum to the public prior to filing of a
prospectus.
However, It shall require to file an Information Memorandum at
everystageofofferofsecuritiesbyit.
PreferenceShareCapital
EquityshareCapital
NominalCapital
IssuedCapital
Thisisthecapital,onwhichthecompanyhadpaidtheprescribedfee
atthetimeofregistration;henceitisalsocalledRegisteredCapital.
ContactNo.9331963835,9239521128,9433352926.
*CSKUMARCHANDRAMOHAN*CSPUJAMOHAN*
(SpecialisedinCA,CS,CWACoachingFoundation/Executive)
RealStudyCentre,148/14,N.S.C.BoseRoad,NearTollygungeMetroStation,Kolkata40.
KUMARLAWCLASSES
SupplementaryNotesCompanyLawForDecember,2012Exam
SubscribedCapital
CalledupCapital
It is that portion of the issued capital at face value which has been Itisthatportionofthesubscribedcapitalwhichhasbeencalledup
subscribed for or taken up by the subscribers of shares in the ordemandedonthesharesbythecompany.
company.
ReserveCapital
CapitalReserve
Shares
Asharehasanominalvalue.
Asharecannotbetransferredintosmallfractions.
Sharescandirectlybeofferedtopublic.
Allsharesbeardistinctivenumber.
Asharemaynotbefullypaidup.
Stock
Stockhasnonominalvalue.
Stockcanbetransferredintoanyfractions.
Unlike the shares, stock cannot be offered by the company to the
public in the first instance. Only fully paid up shares can be
convertedintostockbythecompany.
Stockdiscloses theconsolidatedvalueofthesharecapital.Fraction
ofstocksdoesnotbearanynumber.
Astockisalwaysfullypaidup.
BonusShares
RightShares
Bonussharesmeansnewsharesgivenfreeofcosttoalltheexisting
shareholdersofthecompany,inproportiontotheirholdings.
Forexample,acompanyannouncingbonusissueof1:5,isissuingone
(new)bonusshareforeveryfivesharesheldbytheshareholdersof
thecompany.
ContactNo.9331963835,9239521128,9433352926.
*CSKUMARCHANDRAMOHAN*CSPUJAMOHAN*
(SpecialisedinCA,CS,CWACoachingFoundation/Executive)
RealStudyCentre,148/14,N.S.C.BoseRoad,NearTollygungeMetroStation,Kolkata40.
KUMARLAWCLASSES
SupplementaryNotesCompanyLawForDecember,2012Exam
Equity
Debenture
Shareholdersareownersofthecompany.
Ashareholderenjoystherightsofproprietorshipofacompany.
Ashareholderhasarightofcontrolovertheworkingofthecompany
byattendingandvotinginthegeneralmeeting.
Ashareholderisentitledtoreceivedividendwhenthereareprofits.
The rate of dividend varies from year to year depending upon the
amountofprofit.
Shareholders cannot be paid back (except in case of redeemable
preferenceshares)solongasthecompanyisagoingconcern.
Debentureholdersarecreditorsofthecompany.
Debentureholdercanenjoytherightsofalenderonly.
Debentureholdersdonothaveanyvotingright,andtherefore,they
areunabletoexerciseanysuchinfluence.
Debentureholdersareentitledtointerestatafixedratewhichthe
companymustpaywhetherornotthereareprofits.
PreferenceShares
Debentures
PreferenceShareholdersareeffectivelyownersoftheCompany.
PreferenceShareholdersreceiveprofitintheformofdividends.
If there is no profit, the payment of dividend to Preference
Shareholderscanbepostponed.
Incaseofdissolution,PreferenceShareholdersholdersarepaidlater
thanDebentureholder.
DebentureholdersarecreditorsoftheCompany.
Debentureholdersreceiveafixedrateofinterest.
Interestispaidtodebentureholdersregardlessofwhetherornota
profithasbeenmade.
In case of dissolution of firms debenture holders are paid first as
comparedtoPreferenceshareholder.
SweatEquity
EmployeesStockOption(ESOP)
SweatEquitySharesmeansequitysharesissuedbythecompanyto
employeesordirectorsatadiscountorforconsiderationotherthan
cashforprovidingknowhowormakingavailablerightsinthenature
of intellectualproperty rights or value additions, by whatever name
called.
Sweat Equity is grant of shares at discount or without monetary
considerations.
SweatEquitycanbeissuedtothepromotersoftheCompany.
Minimumlockinperiodof3yearsforSweatEquity.
EmployeeStockOption(ESOP)meanstheoptiongiventothewhole
timedirectors,officersoremployeesofacompany,whichgivessuch
directors,officersoremployeesthebenefitorrighttopurchaseor
subscribeatafuturedate,thesecuritiesofferedbythecompanyat
apredeterminedprice.
ESOP/ESOS is grant of option to purchase share at predetermined
pricegiventoemployees.
ESOP/ESOScannotbeissuedtothepromotersorpromotergroup.
Lockinperiodof1yearforESOS/ESPS.
AlterationofShareCapital
ReductionofShareCapital
Itisgovernedbysection94oftheCompaniesAct,1956.
Itisrequiredtobedonebyordinaryresolution.
Itdoesnotrequiredconfirmation bythecourt
Alterationofsharecapitalmaybedoneinthefollowingmanner:
1.Increasingitsnominalcapitalbyissuingnewshares.
2.Consolidatinganddividingalloranyofitssharecapitalintoshares
oflargedenomination.
Itisgovernedbysection100oftheCompaniesAct,1956.
Itisrequiredtobedonebyspecialresolution
Itrequiresconfirmationbythecourt.
Reductionofsharecapitalmaybedoneinthefollowingmanner:
1.Extinguishingorreducingtheliabilityofmembersinrespectofthe
capitalnotpaidup.
2.Writing off or canceling any paid up capital which is in excess of
ContactNo.9331963835,9239521128,9433352926.
*CSKUMARCHANDRAMOHAN*CSPUJAMOHAN*
(SpecialisedinCA,CS,CWACoachingFoundation/Executive)
RealStudyCentre,148/14,N.S.C.BoseRoad,NearTollygungeMetroStation,Kolkata40.
KUMARLAWCLASSES
SupplementaryNotesCompanyLawForDecember,2012Exam
3.Convertingfullypaidupsharesintostockorviceversa.
theneedsofthecompany.
4.Sub dividing its shares or any of them into shares of smaller 3. Paying off any paid up share capital which is in excess of the
amount.
needsofthecompany.
5. Canceling shares which have not been taken up and diminishing
theamountofsharecapitalbytheamountofthesharessocancelled.
Loan
Aloanisrepayabletheminuteitisincurred.
Obligationtorepayisimmediate.
Deposit
Deposit
Deposits are repayable upon the maturity date fixed or in
accordancetothetermsoftheagreement.
Noimmediateobligationtorepay.
Debenture
Deposit are repayable after the expiry of six months but not later NosuchlimitincaseofDebenture.
than thirty six months from the date of acceptance or renewal of
suchdeposits.
Depositsarenottransferable.
Debenturesaretransferable.
Debenture
Itisaninstrumentofdebt.
Debentureneednotbefullypaidup.
Itcanbetransferredwholly.
Itisidentifiedbydistinctnumber.
Mortgage
DebentureStock
Itisadebtorsumsecuredbyaninstrument.
Debenturestockmustbefullypaidup.
Itcanbetransferredinfraction.
Nodistinctnumber
Charges
Amortgageiscreatedbytheactoftheparties.
ShareCertificate
ShareWarrant
The holder of a share certificate is a registered member of the The bearer of a share warrant is not a registered member of the
company.
company.
Holderofasharecertificateisessentially amemberofthecompany.
ContactNo.9331963835,9239521128,9433352926.
*CSKUMARCHANDRAMOHAN*CSPUJAMOHAN*
(SpecialisedinCA,CS,CWACoachingFoundation/Executive)
RealStudyCentre,148/14,N.S.C.BoseRoad,NearTollygungeMetroStation,Kolkata40.
KUMARLAWCLASSES
SupplementaryNotesCompanyLawForDecember,2012Exam
Thebearerofasharewarrantcanbeamemberonlyifthearticles
soprovideandonlyforthepurposesasdefinedinthearticles.
Theissueofasharecertificatedoesnotrequiretheapprovalofthe Share warrant can be issued only if the articles authorise its issue
CentralGovernment.
andtheCentralGovernmenthasaccordeditspreviousapproval.
Bothpublicandprivatecompaniesmustissuesharecertificates.
Sharewarrantscanbeissuedonlybypubliccompanies.
Asharecertificateisissuedinrespectofpartlyorfullypaidshares.
Asharewarrantcanbeissuedonlyinrespectoffullypaidshares.
ForfeitureofShare
ForfeitureisinitiatedbytheCompanyfornon paymentofcalls.
Byforfeitureofshares,thecompanypenalizesthemember.
Forfeitureofsharesmaybeinitiatedfornon paymentofcall.
SurrenderofShare
Itisinitiatedbytheshareholdersonhisownforanyotherreason.
In surrender of shares, new shares are bought in exchange of
surrenderofoldshares.
Surrender shares may be accepted in the good faith in its own
interest the shares which the shareholder is voluntarily
surrendering.
TransferofShare
TransmissionofShare
Transferisavoluntaryactofamember.
Considerationisalwaysinvolvedintransfer.
Transfer is effected as transfer ofproperty when a member intends
tosellit.
Incaseoftransfer,thememberhastoexecuteavalidinstrumentof
transfer.
Transmissionisbyoperationoflaw.
Noquestionofconsideration,hencenostampduty,etc.
Transmissiontakesplaceonlyonthedeath,bankruptcyandlunacy
ofthemember.
Incaseoftransmission,executionofinstrumentisnotpossible.
LienonShare
Lien can be exercised in respect of amount due on the shares and
amountsdueonotheraccounts.
A lien is a kind of security for a debt and to be retained until the
paymentofdebtinfull.
Alienisenforcedbysaleofsharestoadjusttheoutstandingdues.
Intheeventofexerciseoflien,bysaleofshares,surplus,ifany,isto
bereturnedtothemember.
Incaseoflien,itdoesnotresultinreductionofcapitalassharesare
soldtorecoverthedueamount.
SharesinPhysicalForm
Sharecertificatesareissuedinphysicalform.
Stampdutyistobepaidontransferdeed.
ForfeitureofShare
Rightofforfeitureisexercisedforamountsdueonsharesonly.
Forfeitureislikeapenaltyclausetoenforcethepaymentofmoney
dueonsharesintime.
Forfeitureisactofdeprivinghimofrightsinforfeitedshares.
In the event of forfeiture, the member cannot claim refund of
moneyalreadypaidbyhim.
Incaseofforfeitureitmayresultinreductionofcapitalifsharesare
notsoldorreissued.
SharesinDematerializedform
Sharesareissuedinelectronicform.
Nostampdutyispaidontransfer.
ContactNo.9331963835,9239521128,9433352926.
*CSKUMARCHANDRAMOHAN*CSPUJAMOHAN*
(SpecialisedinCA,CS,CWACoachingFoundation/Executive)
RealStudyCentre,148/14,N.S.C.BoseRoad,NearTollygungeMetroStation,Kolkata40.
KUMARLAWCLASSES
SupplementaryNotesCompanyLawForDecember,2012Exam
Therearechancesoftheft,lossetc.
Nochanceoftheft,forgeryorloss.
Notrequiredtoopenaccountwithanybody.
Itisnecessarytoopenademataccountwithdepositoryparticipant.
Transfer of shares takes longer time due to physical transit of Immediatetransferofshares,asittakesintheelectronicform.
documents.
WholeTimeSecretary
SecretaryinWholeTimePractice
Section2(45A)ofthecompaniesact,1956providesthataSecretary
whoshallbedeemedtobeinpracticewithinthemeaningofsection
2(2)oftheactandwhoisnotinfulltimeemployment.
HeisamemberoftheInstituteofCompanySecretariesofIndiaand
hasacertificateofPracticeissuedbytheICSI.
Unlike,thewholetimesecretary,hedoesnothaveanystatutoryor
Administrativeduty.Hisareaofpracticehavebeenspecifiedandhe
mustcomplywiththesame.
ManagingDirector
Manager
ManagerisdefinedunderSection2(26)oftheCompaniesact,1956.
A Manager means an individual who subject to the
superintendence,controlanddirectionoftheBoardofDirectorshas
the management of the whole or substantially the whole of the
affairs of a company and includes a director or any other person
occupyingthepositionofamanagerbywhatevernamecalledand
whetherunderacontractofserviceornot.
ManagermayormaynotbeaDirector.
ThereshallonlyoneManagerinaCompany.
A Managing Director is entrusted with substantial powers of
managementwhichwouldnototherwisebeexercisablebyhim.
WholeTimeChairman
PartTimeChairman
A chairmancummanaging director (CMD) is sometimes called a A director, who is not a wholetime director of the company, is
wholetimechairman.
calledaparttimechairman.
Motion
Resolution
ContactNo.9331963835,9239521128,9433352926.
*CSKUMARCHANDRAMOHAN*CSPUJAMOHAN*
(SpecialisedinCA,CS,CWACoachingFoundation/Executive)
RealStudyCentre,148/14,N.S.C.BoseRoad,NearTollygungeMetroStation,Kolkata40.
KUMARLAWCLASSES
SupplementaryNotesCompanyLawForDecember,2012Exam
Adjournment
Postponement
Postponementistheactoftheconveningauthority
StatutoryBooks
StatisticalBooks
Fewofthemareasfollows:
(1). Register of investments not held by it in its own name (2).
Registeroffixeddeposits.(3).RegisterofSecuritiesboughtback(4).
Registerofcharges(5).RegisterandIndexofMembers(6).Register
and Index of Debenture holders (7). Minutes Book of Board and
General Meetings (8). Dividend Register (9). Register of directors,
managing directors, manager and secretary (10). Register of
DirectorsShareholdings.
Althoughthereisnolegalcompulsion,acompanyusuallymaintains
anumberofstatisticalbooksinordertokeepcompleterecordsof
thenumerousdetailsconnectedwiththebusinessoperations.
Fewofthemareasfollows:
(1).ShareApplicationandAllotmentBook(2).ShareCallBook(3).
Share Certificate Book (4). Share Transfer Book (5). Debenture
InterestBook(6).DirectorsAttendanceBook(7).DividendMandate
Register (8). Share Warrants Register (9). Register of lost share
certificates(10).Registeroflostsharecertificates.
Statutoryaudit
Specialaudit
Dividend
Interest
Dividendispaidonpreferenceandequityshares
ContactNo.9331963835,9239521128,9433352926.
*CSKUMARCHANDRAMOHAN*CSPUJAMOHAN*
(SpecialisedinCA,CS,CWACoachingFoundation/Executive)
RealStudyCentre,148/14,N.S.C.BoseRoad,NearTollygungeMetroStation,Kolkata40.
KUMARLAWCLASSES
SupplementaryNotesCompanyLawForDecember,2012Exam
Members'VoluntaryWindingUp
Creditors'VoluntaryWindingUp
Acreditors'voluntarywindingupisonewherenosuch declaration
isfiled.
WindingupsubjecttotheSupervisionoftheCourt
VoluntaryWindingup
Inthecaseofvoluntarywindingup,Liquidatorisappointed bythe
members/creditorsandtheCourthasnoroleinthisregard.
Transfer of shares/disposition of property in the case of voluntary
windingupcantakeplaceonlywiththepermissionoftheliquidator.
Inacreditors'voluntarywindingup,thecompanyisdeemedtobe
insolvent and, therefore, the control of liquidation remains in the
handsofthecreditors.
Inacreditors'voluntarywindingup,meetingofcreditorshavetobe
calledatthebeginning.
Inamembers'voluntarywindingup,theliquidatorcanexercisesome Inacreditors'voluntarywindingup,hecandosowiththesanction
of his powers with the sanction of a special resolution of the of the Court or the Committee of Inspection or of a meeting of
company.
creditors.
LimitedLiabilityPartnership(LLP)
However,itisnotsointhecaseofvoluntarywindingup.
ProducerCompany
Suitableforpartnershipconcernssetupbyprofessionalsviz.Charted Thesecompaniesareformedbythemanufacturers,producers
Accountants, Company Secretaries etc. though anybody can join an etc.
LLP.
Twoormorepersonscarryingonalawfulbusiness.
Any ten or more individual producer or two or more producer
institutionsortheircombination.
LimitedtotheLimitedLiabilityAgreement.
Limitedtotheamountofunpaidshare,heldbythem.
Appointmentofdirectorsisnot required.Organizationisrunbythe Minimumfiveandmaximumfifteendirectors.
designatedpartners/partners.
CapitalcontributionasgivenintheLLPagreement.
Thesharecapitalofproducercompanyisdividedintoequityshares
only.
Mayconverttootherformsofbusiness.
Noconversionclauseexists.
10
Theword'LLP'wouldformpartofitsname.
The word'ProducerCompanyLimited'wouldformpartofitsname.
Trust
ContactNo.9331963835,9239521128,9433352926.
*CSKUMARCHANDRAMOHAN*CSPUJAMOHAN*
(SpecialisedinCA,CS,CWACoachingFoundation/Executive)
RealStudyCentre,148/14,N.S.C.BoseRoad,NearTollygungeMetroStation,Kolkata40.
KUMARLAWCLASSES
SupplementaryNotesCompanyLawForDecember,2012Exam
Bailment
Atrusteebecomestheownerofthetrustproperty.
Theobligationoftrusteeisequitable.
Atrustcanbecreatedbothinrespectofmovablepropertyaswellas
immovableproperty.
Inatrust,generallypropertydoesn'tcomebacktotheauthor.
Baileedoesnotbecometheownerofthebailedproperty.
Theobligationofbaileeis legal
Abailmentmaybeonlyinrespectofmovableproperty
Inabailment,generallypropertycomes backtothebailer
Agency
Trust
Anagenthasnotitletotheproperty.
Anagentactsonbehalfoftheprincipal.
Anagentisnotpersonallyliable,ifheactsonbehalfoftheprinciple.
Atrusteeisthefullownerofthetrustproperty.
Atrusteeactsinhisownright.
Ontheotherhand,atrusteeispersonallyliable.
KUMAR LLAWCLASSES
(RealStudyCentre,148/14,N.S.C.BoseRoad,NearTollygungeMetroStation,Kolkata700040.)
ContactNo.:9331963835,9239521128,9433352926.
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