Company law 2018
Section a
1.Annual General Meeting.
Ans. AGM is an annual event where company members and management discuss activities throughout
the year. It should be held once in each calendar year. Section 96 of the Companies Act requires all
companies, private or public, other than one-person companies, to hold an annual general meeting.
Important transactions, such as approving financial statements, Board of Directors & Auditors reports,
dividends, and director appointments, require companies to seek a majority of shareholders approval
every year. The Act also includes provisions for e-voting to increase shareholder participation and
feedback. There shouldn’t be a gap of more than 15 months between two annual general meetings.
2. Who may be a member of a company?
Ans. The Companies Act does not specify who can become a member of a company. However, Section
2(55) of the Act 2013 allows anyone who agrees in writing to become a member. Minors and people of
unsound mind are incompetent to contract, but can apply for shares and be allotted by the company. On
attaining majority, they can repudiate their shares within a reasonable time. A company, an artificial
person created by law, can become a member of another company if authorized by its memorandum of
association or articles of association. Foreigners can become members of a company registered in India,
but their right to join is suspended if their country becomes an enemy country. Partnership firms cannot
purchase shares in their own name, but can purchase shares in the name of individual partners.
3. Different kinds of Company.
And.
On the basis of size or number of members in a company—
1. Section 8 Company-Section 8 Companies, also known as companies with charitable
objects, are established under the Companies Act, 2013, to promote various charitable
objectives such as commerce, art, science, sports, education, research, social welfare,
religion, charity, and environment conservation. These companies must apply profits
back to their objectives and cannot pay dividends to members. The Central Government
has strict control over these companies.
2. Private Company: A private company is an association of individuals with a maximum
membership of 200, and cannot invite the public to subscribe to its shares or
debentures. Shares are not transferable and must be explicitly stated in the Articles of
Association (AOA). A private company can change its status by passing a special
resolution at a general meeting.
3. Public company: A public company, defined by Section 2 (71) of the Companies Act of
2013, requires at least 7 partners and no restrictions on share buying and selling. U/S 58
Shares are freely transferable, and failure to comply can result in renunciation of the
status of a "private company." To convert, a special resolution must be adopted at a
general meeting.
4. One person company(OPC): Section 2(62) of the Companies Act 2012 defines a sole
proprietorship as a company with only one partner or shareholder, and a single director.
The term "nominee" is crucial as the business ceases after the original member's death.
This is different from other types of companies with perpetual succession.
Perpetual succession- In company law, perpetual succession is the continuation of a corporation's or
other organization's existence despite the death, bankruptcy, insanity, change in membership or an exit
from the business of any owner or member, or any transfer of stock, etc.
On the basis of liability
1. Companies limited by shares-Section 2(22) of the Companies Act, 2013 states that a
Company Limited by Shares has limited liability to the amount of unpaid shares held by
its members. Shareholders contribute only to the amount due on their shareholding, but
separate property cannot be used to meet the company's debt.
2. Companies limited by guarantee: Partners' liability in a company is limited to their
contribution to the company's assets in case of dissolution, while shareholders' liability
is determined by the guarantee they provide in the partnership agreement.
3. Companies with unlimited liability: Companies without member liability determinations
have unlimited members' liability, allowing their assets to satisfy debt and potentially
lacking share capital.
On the basis of control
1. Holding Company: A holding company is a company that holds more than half of the
equity share capital of another company or controls its Board of Directors. This can be
achieved through holding more than 50% of the issued equity capital, voting rights, or by
appointing the majority of the company's directors.
2. Subsidiary company-A company, which operates its business under the control of
another (holding) company, is known as a subsidiary company. Examples are Tata
Capital, a wholly-owned subsidiary of Tata Sons Limited.
On the Basis of Ownership, companies can be divided into three categories:
1. Government Company: A government company, as defined by Section 2(45) of the
Companies Act, 2013 is a company with at least 51% of its paid-up share capital held by
the Central Government, State Governments, or a combination of both. This includes
subsidiaries of such companies. Annual reports must be submitted to both Parliament
and state legislatures, depending on ownership. Examples include NTPC and BHEL.
2. Non-Government Company: All other companies, except the Government Companies,
are known as Non-Government Companies. They do not possess the features of a
government company as stated above.
3. Associate company- Section 2(6) of the Companies Act 2013 defines an associated
company as one where another company has substantial influence but is not a
subsidiary, and "significant decision" means controlling at least 20% of voting rights.
Types of Company Based on Listing
1. Listed Company-
