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COMPANIES INCORPORATED OUTSIDE INDIA. Application of Act to foreign companies. Documents, etc., to be delivered to. Section 3 (1) (i) of the Companies Act, defines a company as “a company .. If we explain the definition of Indian Companies Act. in regard to. as the case may be, in Table B in the Schedule annexed to Act. No. XIX of or in Table A in the First Schedule annexed to the Indian Companies Act,,

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of , repealed by the Indian Companies Act of , repealed by the Indian Under the law a company incorporated under the Act is a distinct entity. This part of the study deals with the evolution of company law whether indian or international, sources of funding the company, shareholders. (1) This Act may be called the Companies Act,. (2) It shall come into force on such date {1st April, See Gazette of India, Extraordinary,. , Part II.

One-Person company. Section of the Act which deals with Corporate Social Responsibility. They would relieve the Courts of their burden while simultaneously providing specialized justice. This restriction will not apply to an association or partnership, constituted by professionals like lawyer, chartered accountants, company secretaries, etc. Indian Resident as Director: Every company shall have at least one director who has stayed in India for a total period of not less than days in the previous calendar year. Such other class or classes of public companies as may be prescribed by the Central Government shall also be required to appoint independent directors.

The act was introduced on 29th May, The Company Secretaries Act, An act to make provision for the regulation and development of the profession of Company Secretaries. The act was introduced on 10th December The act was introduced on 17th October, The Depositories Act, An act for regulation of depositories in securities. The act was introduced on 12th August, The Foreign Trade Development and Regulation Act, An act for the development and regulation of foreign trade by facilitating imports into, and augmenting exports from India.

The act was introduced on 7th August, The Hire-download Act, An act to regulate the hire-download transactions, for the protection to downloader of the goods on hire-download, to control certain abuses in the hire-download trading.

The act was introduced on 8th June, The act was introduced on 25 April The act was introduced on 15th October, The Prevention of Money-Laundering Bill, A Bill to prevent money-laundering and for appropriation of property derived from, or involved in, money-laundering. The act was introduced on 23rd February, Prevention of Money Laundering Act, An act to form the core of the legal framework put in place by India to combat money laundering.

The act was introduced on 1st July, Enforcement of the performance of their duties by those engaged in the management of public companies or of private companies which are subsidiaries of public companies by providing sanctions in the case of breach and subjecting the latter also to the more restrictive provisions of law applicable to public companies. Companies Act empowerment and mechanism In India, the Companies Act, , is the most important piece of legislation that empowers the Central Government to regulate the formation, financing, functioning and winding up of companies.

The Act contains the mechanism regarding organizational, financial, and managerial, all the relevant aspects of a company. It empowers the Central Government to inspect the books of accounts of a company, to direct special audit, to order investigation into the affairs of a company and to launch prosecution for violation of the Act. These inspections are designed to find out whether the companies conduct their affairs in accordance with the provisions of the Act, whether any unfair practices prejudicial to the public interest are being resorted to by any company or a group of companies and to examine whether there is any mismanagement which may adversely affect any interest of the shareholders, creditors, employees and others.

If an inspection discloses a prima facie case of fraud or cheating, action is initiated under provisions of the Companies Act or the same is referred to the Central Bureau of Investigation. The Companies Act, has been amended from time to time in response to the changing business environment.

Full text of "Companies Act " available here Please note that the information provided on this page: Does not provide a complete or authoritative statement of the law; Does not constitute legal advice by Net Lawman; Does not create a contractual relationship; Does not form part of any other advice, whether paid or free.

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Companies Act 1956

Separate Property: A company is a legal person and may thus own property in its own right. The legal personhood of the company gives it certain inalienable attributes, such as that it can enter into contracts, it has liabilities, it is liable to be taxed etc. The director of a company cannot download land in the name of the company and then build a residential house on that plot. If any company buildings are built over disputed property, the claim must be made against the company and not against the director s.

Private and Public Company: A private company is one where the stakeholders of the company — whoever has a stake in the company — are not members of the general public. They are members to whom shares have been offered, or they may be the promoters or directors of the company. People who set up private companies do so with the intention of keeping the business decisions and profits within the desired community. As more people begin to contribute towards the company, their stake in the company increases and so do their rights as to the working of the company.

A public company is one where the stakeholders may include members of the public. A company may do this by dividing its capital into many small parts and offering these parts to the public, so that each member of the general public who has an interest in the business and the growth of the company may download as many of these parts, known as shares, as they want. There are a few other differences between a private and a public company. In a private company, the minimum number of members required to start a company is 2, whereas for a public company the minimum of 7 members are required to start a company.

There is a restriction on the maximum number of members for a private company, and that is 50, but there exists no such upper limit for a public company. A private company may be transformed into a public company, or vice versa , if the necessary amendments are made in all the documents that refer to such status of the company and the Registrar is notified.

Registrar of Companies: When a company is set up and commences business, it affects not only the employers and employees within the company, it affects the industry and market as a whole, affects the consumers and the various stakeholders in the company and it also affects the government.

The inter-relationships between these various entities require supervision and regulation. The documents required to register a company will be discussed soon.

The Supreme Court recently validated the setting up of an overarching corporate law tribunal that will take up the company law disputes pending with the Company Law Board, the Board for Industrial and Financial Reconstruction and various high courts. For a company to be registered and legally recognized, it needs to be incorporated. A body of individuals or entities may possess all the attributes that indicate the existence and working of a company, but the incorporation of a company gives it the required legal status.

This incorporation is done when a company is registered and the certificate of incorporation is given. The company is registered when it has submitted the Memorandum of Association and the Articles of Association to the Registrar of Companies.

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Memorandum of Association: The memorandum provides the structure within which the company expects to function. It also lays down some boundaries as to the operation of the company. For instance, the objects clause provides for the main area of business and also ancillary areas, but a company cannot conduct business in any other areas than those specified in that clause.

However, the memorandum is not the only document through which the powers of a company may be ascertained. If the memorandum provides for something that is not legal under the Companies Act, the provision is void. The last part of the memorandum is the subscription where the subscribers declare that they are intent on forming a company and they agree to take up the shares that have been set against their names.

The Companies Act says that a company cannot have any illegal objects for setting up a company. If I set up a company to build warships to overthrow the government, it would be an illegal company. Omar sets up a company with the purpose of conducting research into cloning cows to increase dairy productivity. Since cloning is illegal, the company will be illegal. Articles of Association: The Articles of Association of the company lays down the rules for its administration. All the rules and regulations that outline the relations between the company and its members, among the members themselves are given in the Articles.

The However, in case of an inconsistency between the Articles and the Memorandum, the Articles must give way. There is a provision in the Memorandum of Association of a company that violates the Articles of Association of the Company.

Sign of the Times: A Critical Examination of Financial Assistance Laws in India

It is found that the provision also violates the Companies Act. If the Memorandum violates any provision of the Companies Act, it is void. Therefore, in cases where the Articles of Association conforms with the Companies Act, and the Memorandum is in disagreement with both, the provision of the Companies Act will prevail. A director of a company does something that is not authorized by the Articles of Association, but he tells the client that there is no restriction on his doing so.

Later, the client finds out that the act had never been authorized by the company. Can the client cannot claim compensation from the company? Through development of case law in other common law countries and elsewhere in the world, the law of companies comes with a few legal principles that may be used in cases involving companies. Constructive Notice: The memorandum and the articles of association of every company are registered with the Registrar of Companies.

It is a public office and all the documents filed with the Registrar therefore become public documents, open and accessible to all the members of the public.

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A person intending to deal with the company, who wishes to do business with the company can easily access these documents and get to know about the framework within which the company operates and the manner in which business is done.

The doctrine of Constructive Notice, in fact, presumes that any person intending to enter into a contract with the company would have read the Memorandum and Articles of the company, and has acted on the basis of that knowledge. An intern at a company enters into a deal with a client by saying that he was authorized to make the deal. The client later finds out that the intern was given no such power or authorization, and so, the deal was never valid.

The client cannot take action against the company, because he should have verified beforehand with the Articles of Association of the company. The filing of these public documents with the Registrar is to be construed as constructive notice for anyone intending to enter into a contract and do business with the company.

Indoor Management: You must have understood that the doctrine of Constructive Notice exists in order to protect the company against the outsider and any needless legal action that may arise in the absence of the doctrine.

Companies Act 2013

The doctrine of Indoor Management says that any person entering into a contract with any member of the company is entitled to presume that the contract is legal and valid. That means that all the rules and regulations relating to the conduct of that business have been complied with and unless there is reason for the outsider to believe otherwise, the contract is legal.

Suppose the directors of a company do not have the power or the authority to enter into certain contracts without holding a meeting, the contracting party has a right to presume that the directors have held that meeting and have received the requisite power or the authority to enter into those contracts. Now, we have an idea of some of the legal principles under which a company may operate.

Let us move on to the composition of a company. Typically, a company is established by the promoters, managed by the directors and kept afloat by investors. The Companies Act does not contain the word promoters and the role they play is not governed by the Act. Thus, we will move on to understand the directors of a company.

The directors are the living beings through which the company, an artificial legal entity conducts its business. In this case, the company is the principal and the directors are agents of the company.

The creditors may proceed against the other directors of the company. Directors of a company are expected to look after the interests of the company, and to work in the interest of the company. While it is not expected of them to forego their own interests, what is required is a disclosure by the director in relation to the transaction that he has an interest in.

There are no regulations cast in stone that lay down the rights and duties of the directors of a company. Regarding duties, he is required to take care of the Company, nurture it in a sense and help it grow and prosper. While equity is merely a set of principles that are applied instead of strict legal principles, it is necessary in cases such as these.

This is so because it is not possible to list out the various responsibilities that may arise in the course of business by the directors. However, some duties are necessary for the smooth everyday functioning of the company.

Indian Companies Act : Salient Features - Clear IAS

For instance, a director is expected to attend most of the board meetings and if he fails to attend 3 meetings in a row, he will have automatically vacated his position as director. He is also required to acknowledge and attest the financial statement of the company that is presented at the annual general meeting.

If a director of a company is also qualified as a Chartered Accountant, he is expected to be able to analyse a balance sheet and declare whether the company is making profits or undergoing losses.

A director of a company is not required — in terms of skill — to be able to motivate his employees and workers daily to make them work 12 hours every day. The next important role in the running of a company is played by the members or the shareholders. Every shareholder is a member of the company. And each share that a member holds represents his ownership of that fraction of the company.

There may be different kinds of shareholders, like, preference shareholders and equity shareholders. Equity shares are also called ordinary shares.

It depends on the kind of share you have bought. The kind of share you download will be based on the difference in features, in rights and liabilities that arise from owning them. Companies need capital to do business, to grow and flourish. In a bid to do so, they may decide to raise capital from the public. Ordinary shares are exactly what the name signifies — they are shares that are bought and sold in the stock market.

Preference shares, on the other hand, are a little more special. To understand preference shares, we will have to first understand what dividends are. When you download shares, you invest in the company. That makes you a shareholder or part-owner in the company. The good news is that, since you own part of the assets of the company, you are entitled to a share in the profits these assets generate.

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