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MBA M&S/ HR, Semester 2 Legal Aspects of Business Ms. Shinu Vig
The Act defines the word Company as a company formed and registered under the Act.
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Independent corporate existence. (Salomon v. Salomon and Co. Ltd.) Perpetual succession. Common Seal Limited liability. Transferability of shares. Separate property Power to sue and to be sued.
Classification of Companies: The two basic types of companies which may be registered under the Act are: Private Companies Public Companies
Public Companies [Sec 3(1)(iv)]: A Public company is a company which: i. Is not a private company ii. Has a minimum paid up capital of Rs.5 lakh iii. Is a private company which is a subsidiary of a public company A public company shall have atleast 7 members but there is no restriction with regard to the maximum number of persons. Listed Public Company: It means a public company which has any of its securities listed on a recognised stock exchange.
Certificate of Commencement of Business: A private company can commence business immediately after the certificate of incorporation has been obtained. In case of Public companies it is necessary to obtain a certificate of commencement of business. This certificate can be obtained only after floatation of the company.
MOA is divided into following clauses: i. Name Clause ii. Registered Office Clause iii. Objects Clause iv. Liability Clause v. Capital Clause vi. Association or Subscription Clause
They contain the regulations relating to the internal management of the company. They define the duties, rights, powers and authority of the shareholders and the directors in their respective capacities and of the company.
They are subordinate to and are controlled by memorandum. Articles cannot supersede the objects as set out in the memorandum of association.
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General information Capital structure of the company. Terms of the present issue Particulars of the issue Company management & project Certain prescribed particulars Outstanding litigations Management perception of risk factors
Further Public Offer (FPO): When an already listed company makes a fresh issue of securities to the public it is called Further Public Offer.
The share capital of a company is divided into a number of indivisible units of specified amount. Each of such unit is called a share.
The term share capital is used in following different senses: i. Nominal/ Authorised/ Registered Capital ii. Issued Capital iii. Subscribed Capital iv. Called-up Capital v. Paid-up capital
A debenture means a document acknowledging a loan made to the company and providing for the payment of interest on the sum borrowed until the debenture is redeemed. It provides for the repayment of principal and interest at specified date/ or dates. It generally creates a charge on the assets of the company.
It is required to be held only by a public company. It must be held within a period of not less than 1 month and not more than 6 months from the date at which the company is entitled to commence business. Atleast 21 days before the day of meeting, a notice of the meeting is to be sent to every member stating it to be a Statutory meeting.
All general meetings other than AGMs are called EGMs. EGM is convened for transacting some special or urgent business that may arise in between two AGMs. All business transacted at such meetings are called special business. EGM can be called any time by giving a 21 days notice.
Board Meetings: Must be held at least once in every 3 months. At least 4 such meetings must be held in every calendar year.
Quorum: One-third of the total strength of the directors or two directors, whichever is higher.
Chairman: The Chairman for the meetings of the Board of Directors may either be named in the Articles or he may be elected by the directors.
Winding up of companies is the process whereby its life is ended and its property administered for the benefit of its creditors and members. An administrator, called a liquidator is appointed and he takes control of the company, collects its assets, pays its debts and finally distributes any surplus among the members in proportion to the contribution made by them to the company.
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Compulsory Winding up by the Court Voluntary Winding up - Members Voluntary Winding up - Creditors Voluntary Winding up Voluntary Winding up under the supervision of the Court