COMPANY LAW AND

SECRETARIAL
PRACTICES.
PROJ
ECT

COURSE INSTRUCTOR:- SUBMITTED

BY:-
MR.ROHIT BORA RAHUL
GUPTA
SY-E
2263
 OBJECTIVES OF THE PROJECT

GET TO KNOW ABOUT ACTUAL

PROCEDURE FOLLOWED WHILE
INCORPORATING A JOINT STOCK
COMPANY.

TO KNOW ABOUT THE VARIOUS LEGAL

DOCUMENTS AND FORMS REQUIRED FOR
INCORPORATION.

TO KNOW THE VARIOUS DUTIES AND

RESPONSIBILITIES OF THE PROMOTERS
WHILE FOLLOWING THE PROCEDURE.
 ACKNOWLEDGEMENT

I WOULD LIKE TO THANKS ROHIT SIR FOR

HIS GUIDANCE AND MOTIVATION WHICH
LEAD TO COMPLETION OF THIS
PROJECT.WHILE DOING THE PROJECT, I
LEARNT ABOUT MANY THINGS
WHICH WERE JUST WERE READ BEFORE
ONLY IN BOOKS.

EXPRESSING MY DEEPLY GRATITUDE FOR

THE SUBJECT, I WOULD LIKE TO DO SUCH
PROJECTS IN FUTURE WHICH NOT ONLY
ENHANCES KNOWLEDGE BUT ALSO
BRINGS VIVID PICTURE OF APPLICATION
OF KNOWLEDGE IN REAL & REQUIRED
SITUATIONS.
 INCORPORATION OF A
JOINT STOCK COMPANY

Introduction:

The word 'Company' is an amalgamation of the Latin word

'Com' meaning "with or together" and 'Pains' meaning
"bread". Originally, it referred to a group of persons who
took their meals together. A company is nothing but a group
of persons who have come together or who have contributed
money for some common person and who have incorporated
themselves into a distinct legal entity in the form of a
company for that purpose. The term "company" has been
defined as a collection of many individuals united into one
body under special domination, having perpetual succession
under an artificial form and vested by the policies of law with
the capacity of acting in several respect as an individual,
particularly for taking and granting of property, for
contracting obligation and for suing and being sued, for
enjoying privileges and immunities in common and
exercising a variety of political rights, more or less
extensive, according to the design of its institution or the
powers upon it, either at the time of its creation or at any
subsequent period of its existence. However, the Supreme
Court of India has held in the case of State Trading
Corporation of India v/s CTO that a company cannot have the
status of a citizen under the Constitution of India.

The Companies Act of 1956 sets down rules for the

establishment of both public and private companies. The
most commonly used corporate form is the limited company,
unlimited companies being relatively uncommon. A company
is formed by registering the Memorandum and Articles of
Association with the State Registrar of Companies of the
state in which the main office is to be located.
Foreign companies engaged in manufacturing and trading
activities abroad are permitted by the Reserve Bank of India
to open branch offices in India for the purpose of carrying on
the following activities in India:

1) To represent the parent company or other foreign

companies in various matters in India, for example, acting as
buying/selling agents in India, etc.

2) To conduct research work in which the parent company is

engaged provided the results of the research work are made
available to Indian companies.

3) To undertake export and import trading activities.

4) To promote possible technical and financial collaboration

between Indian companies and overseas companies.

Application for permission to open a branch, a project office

or liaison office is made via the Reserve Bank of India by
submitting form FNC-5 to the Controller, Foreign Investment
and Technology Transfer Section of the Reserve Bank of
India. For opening a project or site office, application may be
made on Form FNC-10 to the regional offices of the Reserve
Bank of India. A foreign investor need not have a local
partner, whether or not the foreigner wants to hold full
equity of the company. The portion of the equity thus not
held by the foreign investor can be offered to the public.
A company as an entity has several distinct features
which together make it a unique organization.
The following are the defining characteristics of a
company:-

Separate Legal Entity:

On incorporation under law, a company becomes a separate

legal entity as compared to its members. The company is
different and distinct from its members in law. It has its own
name and its own seal, its assets and liabilities are separate
and distinct from those of its members. It is capable of
owning property, incurring debt, borrowing money, having a
bank account, employing people, entering into contracts and
suing and being sued separately.

Limited Liability:

The liability of the members of the company is limited to

contribution to the assets of the company upto the face
value of shares held by him. A member is liable to pay only
the uncalled money due on shares held by him when called
upon to pay and nothing more, even if liabilities of the
company far exceeds its assets. On the other hand, partners
of a partnership firm have unlimited liability i.e. if the assets
of the firm are not adequate to pay the liabilities of the firm,
the creditors can force the partners to make good the deficit
from their personal assets. This cannot be done in case of a
company once the members have paid all their dues towards
the shares held by them in the company.

Perpetual Succession:
A company does not die or cease to exist unless it is
specifically wound up or the task for which it was formed has
been completed. Membership of a company may keep on
changing from time to time but that does not affect life of
the company. Death or insolvency of member does not
affect the existence of the company.

Separate Property:

A company is a distinct legal entity. The company's property

is its own. A member cannot claim to be owner of the
company's property during the existence of the company.

Transferability of Shares:

Shares in a company are freely transferable, subject to

certain conditions, such that no share-holder is permanently
or necessarily wedded to a company. When a member
transfers his shares to another person, the transferee steps
into the shoes of the transferor and acquires all the rights of
the transferor in respect of those shares.

Common Seal:

A company is a artificial person and does not have a physical

presence. Therefore, it acts through its Board of Directors for
carrying out its activities and entering into various
agreements. Such contracts must be under the seal of the
company. The common seal is the official signature of the
company. The name of the company must be engraved on
the common seal. Any document not bearing the seal of the
company may not be accepted as authentic and may not
have any legal force.

Capacity to sue and being sued:

A company can sue or be sued in its own name as distinct
from its members.
Separate Management:
A company is administered and managed by its managerial
personnel i.e. the Board of Directors. The shareholders are
simply the holders of the shares in the company and need
not be necessarily the managers of the company.

One Share-One Vote:

The principle of voting in a company is one share-one vote.

I.e. if a person has 10 shares, he has 10 votes in the
company. This is in direct contrast to the voting principle of
a co-operative society where the "One Member - One Vote"
principle applies i.e. irrespective of the number of shares
held, one member has only one vote.

Illegal Association:

Under the Companies Act, 1956, not more than 10 persons

can come together for carrying on any banking business and
not more than 20 persons can come together for carrying on
any other of business, unless the association is registered
under the Companies Act or any other Indian law. Any
association which does not comply with the above norms is
an illegal association. Therefore, a partnership of more 10 or
20 members, as the case may be, is an illegal association
unless the registered under the Companies Act or any other
Indian law.

Consequences of non-registration:

An illegal association is not recognised by law. An illegal

association cannot enter into any contract, cannot sue any
members or any outsider, and cannot be sued by any
members or outsiders for any of its debts. The members of
the illegal association are personally for the obligations of
the illegal association. A member may be liable to a fine of
Rs. 1000. Any member of an illegal association cannot sue
another member in respect of any matter connected with the
association.

Minimum number of members:

A public company must have at least 7 members whereas a

private company may have only 2 members. If the number
of members falls below the statutory minimum and the
company carries on its business beyond a period of six
months after the number has so fallen, the reduction of
number of members below the legal minimum is a ground
for the winding up of the company.

I. Promotion:

Refers to the entire process by which a company is brought

into existence. It starts with the conceptualizations of the
birth a company and determination of the purpose for which
it is to be formed. The persons who conceive the company
and invest the initial funds are known as the promoters of
the company. The promoters enter into preliminary contracts
with vendors and make arrangements for the preparation,
advertisement and the circulation of prospectus and
placement of capital. However, a person who merely acts in
his professional capacity on behalf of the promoter (e.g.
lawyer, CA, etc) for drawing up the agreement or other
documents or prepares the figures on behalf of the promoter
and who is paid by the promoter is not a promoter.

The promoters have certain basic duties towards the

company formed:-

1. He must not make any secret profit out of the promotion

of the company. Secret profits is made by entering into a
transaction on his own behalf and then sell to concerned
property to the company at a profit without making
disclosure of the profit to the company or its members. The
promoter can make profits in his dealings with the company
provided he discloses these profits to the company and its
members. What is not permitted is making secret profits i.e.
making profits without disclosing them to the company and
its members.

2. He must make full disclosure to the company of all

relevant facts including to any profit made by him in
transaction with the company.

In case of default on the part of the promoter in

fulfilling the above duties, the company may:-

1. Rescind or cancel the contract made and if he has made

profit on any related transaction, that profit also may be
recovered.

2. Retain the property paying no more for it then what the

promoter has paid for it depriving him of the secret profit.
3. If these are not appropriate (e.g. cases where the property
has altered in such a manner that it is not possible to cancel
the contract or where the promoter has already received his
secret profit), the company can sue him to for breach of
trust. Damages upto the difference between the market
value of the property and the contract price can be
recovered from him.

A promoter may be rewarded by the company for

efforts undertaken by him in forming the company in
several ways. The more common ones are:-

1. The company may to pay some remuneration for the

services rendered.

2. The promoter may make profits on transactions entered

by him with the company after making full disclosure to the
company and its members.

3. The promoter may sell his property for fully paid shares in
the company after making full disclosures.

4. The promoter may be given an option to buy further

shares in the company.

5. The promoter may be given commission on shares sold.

6. The articles of the Company may provide for fixed sum to

be paid by the company to him. However, such provision has
no legal effect and the promoter cannot sue to enforce it but
if the company makes such payment, it cannot recover it
back.

If the promoter fails to disclose the profit made by him in

course of promotion or knowingly makes a false statement in
the prospectus whereby the person relying on that
statement makes a loss, he will be liable to make good the
loss suffered by that other person. The promoter is liable for
untrue statements made in the prospectus. A person who
subscribes for any shares or debenture in the company on
the faith of the untrue statement contained in the
prospectus can sue the promoter for the loss or damages
sustained by him as the result of such untrue statement.

II.Incorporation by Registration:

The promoters must make a decision regarding the type of

company i.e a pubic company or a private company or an
unlimited company, etc and accordingly prepare the
documents for incorporation of the company. In this
connection the Memorandum and Articles of Association (MA
& AA) are crucial documents to be prepared.

Approval Of Name:

The first step in the formation of a company is the approval

of the name by the Registrar of Companies (ROC) in the
State/Union Territory in which the company will maintain its
Registered Office. This approval is provided subject to
certain conditions: for instance, there should not be an
existing company by the same name. Further, the last words
in the name are required to be "Private Ltd." in the case of a
private company and "Limited" in the case of a Public
Company. The application should mention at least four
suitable names of the proposed company, in order of
preference. In the case of a private limited company, the
name of the company should end with the words "Private
Limited" as the last words. In case of a public limited
company, the name of the company should end with the
word "Limited" as the last word. The ROC generally informs
the applicant within seven days from the date of submission
of the application, whether or not any of the names applied
for is available. Once a name is approved, it is valid for a
period of six months, within which time Memorandum of
Association and Articles of Association together with
miscellaneous documents should be filed. If one is unable to
do so, an application may be made for renewal of name by
paying additional fees. After obtaining the name approval, it
normally takes approximately two to three weeks to
incorporate a company depending on where the company is
registered.
Memorandum of Association of a
company:
Is the constitution or charter of the company and contains
the powers of the company. No company can be registered
under the Companies Act, 1956 without the memorandum of
association. Under Section 2(28) of the Companies Act, 1956
the memorandum means the memorandum of association of
the company as originally framed or as altered from time to
time in pursuance with any of the previous companies’ law
or the Companies Act, 1956.
The memorandum of association should be in any of the one
form specified in the tables B,C,D and E of Schedule 1 to the
Companies Act, 1956. Form in Table B is applicable in case
of companies limited by the shares , form in Table C is
applicable to the companies limited by guarantee and not
having share capital, form in Table D is applicable to
company limited by guarantee and having a share capital
whereas form in table E is applicable to unlimited
companies.

Contents of Memorandum:

The memorandum of association of every company must

contain the following clauses:-

Name clause:

The name of the company is mentioned in the name clause.

A public limited company must end with the word 'Limited'
and a private limited company must end with the words
'Private Limited'. The company cannot have a name which in
the opinion of the Central Government is undesirable. A
name which is identical with or the nearly resembles the
name of another company in existence will not be allowed. A
company cannot use a name which is prohibited under the
Names and Emblems (Prevention of Misuse Act, 1950 or use
a name suggestive of connection to government or State
patronage.

Domicile clause:

The state in which the registered office of company is to be

situated is mentioned in this clause. If it is not possible to
state the exact location of the registered office, the company
must state it provide the exact address either on the day on
which commences to carry on its business or within 30 days
from the date of incorporation of the company, whichever is
earlier. Notice in form no 18 must be given to the Registrar
of Companies within 30 days of the date of incorporation of
the company. Similarly, any change in the registered office
must also be intimated in form no 18 to the Registrar of
Companies within 30 days. The registered office of the
company is the official address of the company where the
statutory books and records must be normally be kept. Every
company must affix or paint its name and address of its
registered office on the outside of the every office or place
at which its activities are carried on in. The name must be
written in one of the local languages and in English.

Objects clause:

This clause is the most important clause of the company. It

specifies the activities which a company can carry on and
which activities it cannot carry on. The company cannot
carry on any activity which is not authorized by its MA.

Capital clause:

The amount of share capital with which the company is to

be registered divided into shares must be specified giving
details of the number of shares and types of shares. A
company cannot issue share capital greater than the
maximum amount of share capital mentioned in this clause
without altering the memorandum.

Association clause:

A declaration by the persons for subscribing to the

Memorandum that they desire to form into a company and
agree to take the shares place against their respective name
must be given by the promoter.

Articles of Association:

The Articles of Association (AA) contain the rules and

regulations of the internal management of the company. The
AA is nothing but a contract between the company and its
members and also between the members themselves that
they shall abide by the rules and regulations of internal
management of the company specified in the AA. It specifies
the rights and duties of the members and directors.
The provisions of the AA must not be in conflict with the
provisions of the MA. In case such a conflict arises, the MA
will prevail.
Normally, every company has its own AA. However, if a
company does not have its own AA, the model AA specified
in Schedule I - Table A will apply. A company may adopt any
of the model forms of AA, with or without modifications. The
articles of association should be in any of the one form
specified in the tables B,C,D and E of Schedule 1 to the
Companies Act, 1956. Form in Table B is applicable in case
of companies limited by the shares, form in Table C is
applicable to the companies limited by guarantee and not
having share capital, and form in Table D is applicable to
company limited by guarantee and having a share capital
whereas form in table E is applicable to unlimited
companies. However, a private company must have its own
AA.

The important items covered by the AA

include:-

1. Powers, duties, rights and liabilities of Directors

2. Powers, duties, rights and liabilities of members
3. Rules for Meetings of the Company
4. Dividends
5. Borrowing powers of the company
6. Calls on shares
7. Transfer & transmission of shares
8. Forfeiture of shares
9. Voting powers of members, etc
III. Registration of the Company:

Once the documents have been prepared, vetted, stamped

and signed, they must be filed with the Registrar of
Companies for incorporating the Company. The following
documents must be filed in this connection:-

1. The MA & AA.

2. An agreement, if any, which the company proposes to,

enter into with any individual for appointment as its
managing director or whole-time director or manager.

3. A statutory declaration in Form 1 by an advocate, attorney

or pleader entitled to appear before the High Court or a
company secretary or Chartered Accountant in whole - time
practice in India who is engaged in the formation of the
company or by a person who is named as a director or
manager or secretary of the company that the requirements
of the Companies Act have been complied with in respect of
the registration of the company and matters precedent and
incidental thereto.

4. In addition to the above, in case of a public company, the

following documents must also be filed:-

i. Written consent of directors in Form 29 to agree to act as

directors.

ii. The complete address of the registered office of the

company in Form 18

iii. Details of the directors, managing director and manager

of the company in Form 32.

Miscellaneous Documents:-

The documents/forms stated below are filed along with

Memorandum of Association and Articles of Association on
payment of filing fees (depending on the authorized capital
of the company):
# Declaration of compliance duly stamped.

# Notice of the situation of the registered office of the

company.

# Particulars of Directors, Manager or Secretary.

# Authority executed on a non-judicial stamp paper, in

favour of one of the subscribers to the Memorandum of
Association or any other person authorizing him to file the
documents and papers for registration and to make
necessary corrections, if any

# The ROC’s letter (in original) indicating the availability of

the name.

Tax Registration:

Businesses liable for income tax must obtain a tax

identification card and number [known as Permanent
Account Number (PAN)] from the Revenue Department. In
addition to this, businesses liable to withhold tax must
necessarily obtain a Tax Deduction Account Number (TAN).
Both the PAN and the TAN must be indicated on all the
returns, documents and correspondence filed with the
Revenue Department. The PAN is also required to be stated
in various other documents such as the documents
pertaining to sale or purchase of any immovable property
(exceeding Rs. 5 lakh), sale or purchase of a motor vehicle,
time deposit (exceeding Rs. 5 lakh), contract for sale or
purchase of securities (exceeding Rs. 10 lakh), to name a
few.

Rules Applicable:
Companies (Central Governments') General Rules and
Forms, 1956.

Fees:

Fee payable depends on the nominal capital of the company

to be registered and may be paid in one of the following
modes. Cash/postal order (upto Rs.501-), demand draft
favoring Registrar of Companies/Treasury Challan should be
payable into specified branches of Punjab National Bank for
credit.

Time-Limit:

It should be submitted before incorporation or within 6

months of the name being made available.

Practice Notes :

The declaration has to be signed by an advocate of Supreme

Court or High Court or an attorney or pleader entitled to
appear before the High Court or a secretary or chartered
accountant in whole-time practice in India who is engaged in
the formation of the proposed company or person named in
the articles as director, manager or secretary.
The Registrar of Companies has to be satisfied that not only
the requirements of section 33(1) and (2) have been
complied with but be also satisfied that provisions relating to
number of subscribers, lawful nature of objects and name
are complied with.
The Registrar will check whether the documents have been
duly stamped and also whether the requirements of other
laws are met.
Any defect in any of the documents filed has to be rectified
either by all the subscribers or their attorney, or by any one
subscriber holding the power of attorney on behalf of other
subscribers.
This form is to be presented to the Registrar of Companies
within three months from the date of letter of Registrar
allowing the name.
This declaration is to be given on a non-judicial stamp paper
of the requisite value. The stamp paper should be purchased
in the name of the person signing the declaration.
This declaration is to be given by all the companies at, the
time of registration, public or private.
The place of Registration No. of the company should be filled
up by mentioning New Company therein.
The Registrar of Companies will now accept computer laser
printed documents for purposes of registration provided the
documents are neatly and legibly printed and comply with
the other requirements of the Act. This will be an additional
option available to the public to use laser print besides offset
printing for submitting the memorandum and articles for the
registration of companies.
Where the executants of a memorandum of association are
illiterate, he shall give his thumb impression or marks which
should be described as such by the subscriber or person
writing for him.
An agent may sign a memorandum on behalf of a subscriber
if he is authorized by a power-of-attorney to do so. In the
case of an illiterate subscriber to the memorandum and
articles of association, the thumb impression or mark duly
attested by the person writing for him should be given. The
person attesting the thumb mark should make an
endorsement on the document to the effect that it has been
read and explained to the subscriber. The Registrar of
Companies will not accept xerox copies of the memorandum
and articles of association for the purposes of registration of
companies.

Certificate of Incorporation:

Once all the above documents have been filed and they are
found to be in order, the Registrar of Companies will issue
Certificate of Incorporation of the Company. This document
is the birth certificate of the company and is proof of the
existence of the company. Once, this certificate is issued,
the company cannot cease its existence unless it is dissolved
by order of the Court.

IV. Commencement of Business:

A private company or a company having no share capital can
commence its business immediately after it has been
incorporated. However, other companies can commence
their activities only after they have obtained Certificate of
Commencement of Business. For this purpose, the following
additional formalities have to be complied with:-

1. If a company has share capital and has issued a

prospectus, then:-

a. Shares upto the amount of minimum subscription must be

allotted.

b. Every director has paid to the company on each of the

shares which he has taken the same amount as the public
have paid on such shares.

c. No money is or may become payable to the applicants of

shares or debentures for failure to apply for or to obtain
permission to deal in those shares or debentures in any
recognised stock exchange.

d. A statutory declaration in Form 19 signed by one director

or the employee - company secretary or a Company
secretary in whole time practice that the above provisions
have been complied with must be filed.

2. If a company has share capital but has not issued a

prospectus, then:-

a. It must file a statement in lieu of prospectus with the

Registrar of Companies.

b. Every director has paid to the company on each of the

shares which he has taken the same amount as the other
members have paid on such shares.

c. A statutory declaration in Form 20 signed by one director

or the employee - company secretary or a Company
secretary in whole time practice that the above provisions
have been complied with must be filed
Once the above provisions have been complied with, the
Registrar of Companies grants "Certificate of
Commencement of Business" after which the company can
commence its activities.

Reporting Requirements:

Annual Accounts:

The Indian company law does not prescribe the books of

accounts required to be maintained by a company. It,
however, provides that the same should be kept on accrual
basis and according to the double entry system of
accounting and should be such as may be necessary to give
a true and fair state of affairs of the company.
The Indian company law requires every company to maintain
proper books of account with respect to the following:
# All sums of money received and expended and the
matters in respect of which the receipt and expenditure take
place
# All sales and purchases of goods by the company
# The assets and liabilities of the company
# In case of companies engaged in manufacturing,
processing, mining etc, such particulars relating to utilization
of material or labour or other items of cost.

The first annual accounts of a newly incorporated company

should be drawn from the date of its incorporation upto to
the day not preceding the AGM date by more than 9 months.
Thereafter, the accounts should be drawn from date of last
account upto the day not preceding the AGM date by more
than 6 months subject to the extension of the time limit in
certain cases. The accounts of the company must relate to a
financial year (comprising of 12 months) but must not
exceed 15 months. The company can obtain an extension of
the accounting period to the extent of 18 months by seeking
a prior permission from the ROC.
The annual accounts must be filed with the ROC within 30
days from the date on which the Annual General Meeting
(AGM) of the company was held or where the AGM is not
held, then within 30 days of the last date on which the AGM
was required to be held.

Every company is required to maintain proper books of

account with respect to all sums of money received and
expended all sales and purchases of goods, the assets and
liabilities. Central Government may also specifically require
the maintenance of certain additional particulars with
respect to certain classes of Companies. The books of
account relating to eight years immediately preceding the
current year together with supporting vouchers are required
to be preserved in good order. Every profit and loss account
and balance sheet of the company (together referred to as
financial statements) is required to comply with the
accounting standards issued by the Institute of Chartered
Accountants of India. Any deviations from the accounting
standards, including the reasons and consequent financial
effect, are required to be disclosed in the financial
statements.
The responsibility for the preparation of financial statements
on a going concern basis is that of the management. The
management is also responsible for selection and consistent
application of appropriate accounting policies, including
implementation of applicable accounting standards along
with proper explanation relating to any material departures
from those accounting standards. The management is also
responsible for making judgments and estimates that are
reasonable and prudent so as to give a true and fair view of
the state of affairs of the entity at the end of the financial
year and of the profit or loss of the entity for that period.

Annual Return:

Every company having a share capital is required to file an

annual return with the ROC within 60 days from the date on
which the AGM of the company was held or where the AGM
is not held, then within 60 days of the last date on which the
AGM was required to be held.

Certain Accounting related

issues:

Depreciation:

The company law in India permits the use of depreciation

rates according to the nature of the classes of assets. Assets
can be depreciated either on the basis of straight-line
method (based on the estimated life of the asset) or on the
basis of reducing balance method. The law prescribes the
minimum rates of depreciation. A company may, however,
provide for a higher rate of depreciation, based on a
bonafide technological evaluation of the asset. Adequate
disclosure in the annual accounts must be made in this
regard.

Dividend:

There is no limit on the rate of dividend but there are certain

conditions prescribed with regard to computation of profits
that can be distributed as dividend. Generally, no dividend
can be paid for any financial year except out of the profits of
that year after making an adequate provision for
depreciation subject to certain conditions.
Dividends may also be distributed out of accumulated
profits.

Repatriation of profits:

A company has to retain a maximum of 10% of the profits as

reserves before the declaration of dividends. These reserves,
inter alia, can be subsequently converted into equity by way
of issue of bonus shares. Dividends are freely repatriable
once the investment approval is granted.

Imposition of taxes:

Currently, domestic companies are taxable at the rate of

35.875% (inclusive of surcharge of 2.5%) on its taxable
income. Foreign companies are taxed at a marginally higher
rate of 41% (including surcharge of 2.5%). However, in case
where the income tax liability of the company under the
provisions of the domestic tax laws works out to less than
7.5% of the book profits (derived after making the necessary
adjustments), a Minimum Alternate Tax of 7.6875%
(including a surcharge of 2.5%) on the book profits, would be
payable. Domestic companies are required to pay a dividend
distribution tax of 12.8125% (including surcharge of 2.5%)
on the dividends distributed during the year.
Companies are required to withhold tax under the domestic
law from certain payments including salaries paid to
employees, interest, professional fee, payments to
contractors, commission, winnings from games / lottery /
horse races etc. Moreover, taxes have to be withheld from all
payments made to non-residents at the lower of rates
specified under the domestic law or under the applicable tax
treaty, if any.

Penalty:

#Imprisonment up to two years and fine.

#Person liable for default.
# Person signing the declaration.
 CONCLUSION

THE PROJECT HAS HELPED IN

UNDERSTANDING THE UNDERSIGNED
TOPIC MORE CLEARLY AND GIVEN THE
VIVID PICTURE OF COMPANY LAWS AND
ISSUES.

THE PROJECT HELPED ME TO DEVELOP

INTEREST AND BUILD CONFIDENCE IN
EXPLORING THE COMPLEX PART OF THE
BUSINESS WORLD AND REVEALED ITS
UNDUE IMPORTANCE.
 BIBLIOGRAPHY

1.) BUSINESS LAW INCLUDING COMPANY LAW

BY
S.S.GULSHAN $ G.K. KAPOOR.

2.) www.moneycontrol.com

3.) www.mca.gov.in

4.) www.sebi.gov.in