MS.
LIHA MENA
ASST.PROF. IN COMMERCE
UNIT-I
COMPANY
Definition of Company
Section 3(1)(i)and (ii) of the Companies Act define a
company as “a company formed and registered under this Act or
an existing company. An existing company means a company
formed and registered under any of the former Companies Acts.”
According to Lord Justice Lindley, “By a company is meant an
association of many persons who contribute money or money’s
worth to a common stock and employ it in some trade or
business, and who share the profit and loss(as the case may be)
arising therefrom. The common stock so contributed is denoted
in money and is the capital of the company. The persons who
contribute it. Or to whom it belongs, are members. The
proportions of capital to which each member is entitled is his
share. Shares are always transferable although the right to
transfer is more or less restricted.”
According to Haney “A Company is an incorporated association,
which is an artificial person created by law, having a separate
entity, with perpetual succession and a common seal”.
1.Incorporated association
2.Artificial legal person
3.Separate legal entity
4.Perpetual existence
5.Common seal
6.Limited liability
7.Transferability of shares
According to the mode of incorporation
1. Statutory company
Formed by the special Act passed either by the central or State
legislature. Eg. SBI, RBI,LIC,FCI etc.
Not required to have any Memorandum of Association as they
are governed by the Act constituting them.
Do not have to use the word ‘limited’ as part of their name.
2. Incorporated or registered company
A company registered under the Companies Act.
All existing companies in India except the statutory companies
have been formed in this way.
Registered Companies can be further divided in two ways
(i) On the basis of the number of members and
(ii) On the basis of liability of members.
On the basis of the number of2.members
Public Company
1. Private Company
According to section 3(1)(iii), as Section 3(1)(iv) defines a public
amended by the companies company as a company which is
amendment act 2000, a Private Not a private company
company means a company Has a minimum paid up capital
which has a minimum paid up of rs. Five lakh or such higher
capital of Rs. One lakh or such paid up capital as may be
higher paid up capital as may be prescribed
prescribed and by its articles of Is a private company which is a
association subsidiary of a company which is
not a private company.
Restricts the right of the
(i.e. which does not have the 4
members to transfer shares if restrictions of a private
any company)
Limits the number of members
to fifty, excluding members who
are or were in the employment
of the company
Prohibits any invitation to the
public to subscribe for any
On the basis of the liability of the members
1.Companies limited by 2. Companies limited by 3. Unlimited companies
shares guarantee
1.The liability of the 1.A company has the liability 1. There is no limit on the
members is limited by the of its members limited by liability of the members and
MOA to the amount if any the memorandum to such it may extent to the personal
unpaid on the shares amount as may be property of the members.
respectively held by them. respectively thereby
2. These are limited liability undertake to contribute to
companies. the assets of the company in
3.The liability can be forced the event of its being wound
during the existence and also up.
during the winding up of the 2. The amount from each
company. member cannot be
demanded until the
company is wound up.
3. Companies of this type are
usually formed for non
trading purposes and do not
have share capital. Eg. The
Chambers of Commerce,
trade associations etc.
1. Licensed companies or Companies not for profit.
Such companies are registered under the companies act but they have to obtain a licence from the central
government.
These companies are usually formed for promoting art, commerce, science, religion, charity or any other useful
object and do not intend to apply its profits in paying dividends rather in promoting its objects.
Enjoys certain privileges such as excluding the word limited from its name, non payment of stamp duty on
registration of their MOA.
2. One-man Company or Family Company
One man holds the whole of the share and only takes dummy members only to fulfil the statutory requirement
(7 in case of public co. and 2 in case of private co.)
3. Foreign Company
A company which has been incorporated outside India but having a place of business in India.
After 30 days of establishing business in India, it has to submit to the Registrar, the following
documents as per sec 592
A certified copy of the Charter, Statute, MOA, AOA. If not in English, a certified translation thereof.
The full add. of the registered or principal office of the Co.
A list of the directors, secretary giving full details.
Name and add. Of any person authorised to accept service of legal process and notices in India.
The co. has to state the name of the country of its incorporation in every document that it circulates to the public, it
has to exhibit outside every office, its name and the name of the incorporation in English and in a regional language.
It has to also state whether the liability of its members is limited or not in every official publications.
UNIT-I
a. INCORPORATION, RAISING OF
CAPITAL, COMMENCEMENT OF
BUSINESS
b. MEMORANDUM AND
ARTICLES OF ASSOCIATION
Contents of the Memorandum (section 13)
1. The 3.The objects
2.The registered
name clause
office clause
clause
4. The 5. The capital 6. The
liability clause subscription/
clause association clause
