INTRODUCTION TO

COMPANIES ACT 1956

What is a company
A company is an artificial person created
by law.
A company means a group of persons
associated together for the attainment of a
common end, social or economic.
Definition of a company
According to Sec (1), A company formed and registered
under the act.
According to Sec (3) of the act, on incorporation a
company becomes a body corporate or a corporation
with a perpetual succession and a common seal.
According to N.D.Kapoor, IT is a voluntary association
of persons formed for some common purpose, with
capital divisible into parts, known as shares, and with a
limited liability. It is a creation of the law and is
sometimes known as an artificial person with a perpetual
succession and a common seal. IT exists only in the
eyes of the law, I.e., it is regarded by the law as person,
just as a human being. But it has no physical existence.

CHARACTERSTICS OF A COMPNAY
Separate legal entity
Limited liability
Perpetual succession
Common seal
Transferability of shares
Separate property
Capacity to sue

Classification of Companies
Companies
On the basis of
incorporation
On the basis of
liability
On the basis
Of no. of
members
On the
Basis
Of control
On the
Basis
Of ownership
Statutory companies
Registered companies
Cos. With limited
liability
Ltd.
By
shares
Ltd.
By
guarantee
Unlimited liability
Private
company
Public
company
Holding
company
Subsidiary
company
government
Non-
government
Classification on the basis of
incorporation
Statutory companies: These are created by
special act of the legislature
E.g.: The Reserve bank of India
The Life Insurance corporation
The Unit Trust Of India
Registered Companies: These are the
companies which are formed and registered
under the companies Act, 1956 or were
registered under any of the earlier companies
act.
Classification on the basis of
liability
1. Companies with limited liability:
A. Companies limited by shares
E.g.:Infrastructure Corporation of Andhra Pradesh Limited,
MSEB Holding Company Limited,
Maharashtra State Power Distribution Company Limited,
Maharashtra State Power Generation Company Limited and
Maharashtra State Power Transmission Company Limited.
B. Companies limited by guarantee
E.g.:
Schools & Educational Establishments
Clubs & Associations
Charities and Organisation intending to apply for charitable status
Churches & other Places of Worship
Trade or Research Associations

2. Unlimited companies
E.g.: Jonathan Rose co.,
Wicks Group of companies
Suyog system and Software pvt. Ltd.

Classification on the basis of number of members
Private company
A private company means a company which has a
minimum paid up capital of Rs.1,00,000 or such higher
paid up capital as may be prescribed , and by articles-
(a) restricts the right to transfer its shares, if any. This
restriction Is meant to preserve the private character of the
company
(b) limits the number of its members to 50 not including its
employee-members
( C) prohibits any invitation to the public to subscribe for any
shares in or debentures of the company
(d) prohibits any invitation or acceptance of deposits from
persons other than its members, directors and their relatives
Public company
A public company means a company which
Has a minimum paid up capital of Rs.5 lakh or such high paid-
up capital, as may be prescribed


Classification on the basis of control
Holding company
A company is known as the holding company of
another company if it has control over that other
company.
Subsidiary company
A company is known as a subsidiary of another
company when control is exercised by the latter over
the former called a subsidiary company.
Company controlling composition of Board of Directors
Holding of majority of shares
Subsidiary of another subsidiary
Classification on the basis of ownership
Government company
A Government Company means any
company in which not less than 51% of the
paid-up share capital is held by
The central government or
Any state government or governments or
Partly by the central government and partly by
one or more state governments.
E.g.: State Trading Corporation of India Limited
Minerals and Metals Trading Corporation of India
limited
Non-government company
Foreign companies
MNCS/ TRANSNATIONAL
COMPANY
A multinational corporation is a business
enterprise that retains direct investments
overseas and that maintains value-added
holdings in more than one country. A firm
is not really multinational if it just engages
in overseas trade or as a contractor to
foreign firms
They are also called transnational
companies
BLUE CHIP COMPANIES
A blue chip stock is the stock of a well-
established company having stable earnings
and no extensive liabilities. The term derives
from casino, where blue chips stand for counters
of the highest value. Most blue chip stocks pay
regular dividends, even when business is faring
worse than usual. They are valued by investors
seeking relative safety and stability, though
prices per share are usually high. Typically, such
stocks are perceived to offer reliable returns, low
yield, and low risk.
THANK YOU
Topics2c.blogspot.com
http://topics2c.blogspot.com