INTRODUCTION TO COMPANY ,TYPES

OF COMPANY&

FORMATION OF COMPANY

COMPANY is a voluntary association of persons formed for the purpose of doing business, having a distinct name and limited liability. It is a juristic person having a separate legal entity distinct from its members who constitute it, capable of rights and duties of its own and endowed with the potential of perpetual succession.

COMPANY –ITS MEANING

1. Incorporated association2. Separate legal entity3. Limited liability4. Separate property5. Perpetual succession6. Transferability of shares7. Common seal8. Capacity to sue and be sued

CHARACTERISTICS OF A COMPANY

1. Artificial legal Person2. Limited liability3. Perpetual succession4. Transferability of shares5. Infinite Membership6. Permanency of capital & protection to

creditors7. Mobilization of Huge resources8. Separate Property9. Ease in Control & management10. Capacity to sue

ADVANTAGES OF INCORPORATION

1. Formalities & Expenses2. Corporate Disclosures3. Divorce of control from

Ownership4. Loss of privacy5. Detailed winding up

procedure6. Control by few 7. Greater social responsibility8. More tax burden in certain

cases9. Possibility off frauds

DISADVANTAGES OF INCORPORATION

companies

incorporated

Chartered companies

Statutorycompanies

unincorporated

Registered companies

Companies limited by guarantee

Unlimited limited

companies

Companies limited by

shares

opc

public

private

opc

public

privateopcpublicprivate

Private companies It’s a very suitable form for carrying on the business of the family & small concerns as the minimum numbers required is only 2. [Sec. 2(68)] of the companies act 2013 deals with the definition of private company that provides that every private company should have a minimum paid up capital of 1 lakh rupees.The definition of the private company is quoted u/s 2(28) of the Companies act, 2013. it means a company which has a minimum paid up capital of one lakh rupees or such higher paid up capital as may be prescribed and by its articles:-

Private and public companies

1.Restricts -- the right to transfer its shares

2. Limits -- the no. of its members to two hundred

3. Prohibits – any invitation to the public to subscribe for any shares or debentures of the company

4. Prohibits – nay invitation or acceptance of deposits from person other than its members , directors or there relatives.

According to section2(71) of the companies act 2013 A Public Company means a company which :-1 . Is not a private company2. has a minimum paid up capital of five lakh rupees or such higher paid up capital as may be prescribed 3.is a private company which is subsidiary of a public company.

Public companies

Section 2(45) of the companies act defines a government company to mean any company in which not less than 51% of the paid up capital is held by:1. The central government2. the state government or governments3. Partly by the central government and

partly by one or more state government, or by any state government or governments, or partly by the central govt. & partly by one or more state governments.

Government companies

It means a company incorporated outside India and having a place of business in India. Accordingly a company which is incorporated outside India and employs agents in India but has no office or does not establish a place of business in India will not be a foreign company .According to section 2(42) of companies act 2013, a foreign company is one incorporated outside India which established a place of business within India after the commencement of this act, or which had a place of business within India before the commencement of this act and continues to have the same at the commencement of this act .

Foreign companies

One person company is a new concept in India under the companies act 2013section2(62) of the companies act 2013 defines that one person company means a company which has one person as a member One person company is required to identify in its name in bracket as one person company after its name.

It means a group of two or mo0re individuals associations firms or bodies corporate or any combination thereof, which exercises or is in a position to exercise or has the object of exercising control over any body corporate firm or trust.

One person company

GROUP

The companies Act provides that each of the following institution shall be deemed to be public financial institution for this purpose of this act namely :1. The industrial credit and investment

corporation of India limited2. The industrial development bank of India3. The life insurance corporation of India 4. The unit trust of India5. The infrastructure development finance

company limited, a company formed and registered under this act .

Public financial institutions

FORMATION OF A COMPANY

STAGES IN FORMATION OF COMPANY

It’s the 1st and important stage. Promotion is the process of organizing and planning the finances of a business enterprise under the corporate form. The persons who undertake the task of promotion are called promoters.

1. Discovery of idea2. Detailed investigation3. assembling resources4. Preparing preliminary documents5. Entering into preliminary contracts6. Naming a company7. Appointment of bankers, brokers, solicitors &

underwriters

PROMOTION

FUNCTION OF A PROMOTER

A company comes into existence when a no. of persons come together with a view to exploit some business opportunity. they may form an incorporated company for a lawful purpose by subscribing their names to the Memorandum of Association and complying to the other requirements in respect of registration like availability of name ,ensuring the minimum paid up capital ,formalities to obtain certificate of incorporation there are various documents which needs to be filled with the registrar.

1

It’s the charter of the company. This includes its objectives, its name, the address of its registered office, the capital which the company is authorized to raise etc.

INCORPORATION

MEMORANDUM OF ASSOCIATION

2

This contains the rules and regulations relating to the internal management of the company.

3 VETTING OF MEMORANDUM, ARTICLES, PRINTING, STATIONARY, AND SIGNING THE SAME

4 PRINTING OF MEMORANDUM AND ARTICLES

5 STAMPING OF MEMORANDUM AND ARTICLES

6 SIGNING OF MEMORANDUM AND ARTICLES

7 DATING OF MEMORANDUM AND ARTICLES

8 COPY OF PROPOSED AGREEMENT

9 POWER OF ATTORNEY

10 CONSENT OF THE DIRECTORS

11 PARTICULARS OF DIRECTORS ALONG WITH DIN

12 FILLING OF AGREEMENT

13 NOTICE OF REGISTERED ADDRESS MUST ALSO BE MADE

14 STATUARY DECLARATION OF COMPLIANCE

ARTICLES OF ASSOCIATION

The legal effect of incorporation is as under :-1. A company becomes a body corporate

distinct from its members2. A company has a perpetual succession and

common seal3. A company can sue and can be sued in its

own name4. A company has a right to hold on and

alienate its own property5. Company's debts and obligations are the

liabilities of the company only and cant be enforced against the individual shareholders.

Certificate of incorporation

When a company has been registered and has received certificate of incorporation it is ready for flotation that means it can go ahead with raising capital necessary to commence business and to carry on its operations satisfactory.

Commencement of BusinessCompanies can commence their business after obtaining the certificate of commencement of business and to obtain the same there are various Documents which are needed to be filed with the registrar of companies .like list of members of company , certified copy of MOA & AOA….. etc

Capital subscription