company law 2012-

Company Law

Dr. V. K. JainM.Com., M.Phil., LL.M. Ph.D. (Tax), FCS

Practising Company Secretary

Companies Act 1956

Why Study Company Law?– Most popular form of business organisation. Why……….?– It provides an organisational framework– It is a means to an end – It offers several advantages over other forms of business

organisations– A company is a person in Income-tax– More than 60% of income-tax revenue comes from corporate

assesses.

CAPS Dr. V. K. Jain 2

How many companies are there in India?

There has been tremendous growth of companies in the nineties due to the new economic policy of liberalisation, the new scheme of taxation of partnership firms, the expanding capital market etc.

As a result the number of companies increased manifold from about 1.25 lacs in 1980 to around 9 lacs by January 2012.

Mumbai ROC has around 2,40,000 companies while Delhi ROC has around 2,25,000.

There are around 10,000 listed companies.

1850 The first Companies Act was passed in India in the year

1850. Thereafter the Companies Act, 1866 was enacted,

followed by the Companies Act 1913 which was replaced by

the present Companies Act, 1956.

The Companies Act 1956 has been amended several times. The

Companies (Amendment) Act, 1999, 2000 & 2002 has drastically

amended the Companies Act, 1956, to respond to the changed

economic environment and liberalisation and globalisation

policies of the Government.

A new Companies Act is in the offing and the new company law

bill has already been presented before the Parliament.

Ministry of Corporate Affairs

In 2004 a new Ministry of Company Affairs (renamed Ministry

of Corporate Affairs since 9th May 2007) was created for the

first time under the charge of an independent Minister.

MCA-21 – This is the biggest e- governance initiative taken by

the Ministry of Corporate Affairs in 2006. All manual filing of

returns and documents have been abolished and e-filing has

been introduced.

Meaning of a Company


MEANING OF A COMPANY

Separate Legal Entity Transferable Shares

Limited Liability Separate Property

Perpetual Succession Common Seal

REGISTERED OR INCORPORATED UNDER THE COMPANIES ACT WHERE BY IT AQUIRES CERTAIN ATTRIBUTES

FOR SOME COMMON PURPOSE VIZ. BUSINESS, CHARITY, RESEARCH ETC.

A COMPANY IS AN ASSOCIATION OF PERSONS

Non-corporate form of business enterprises-

Sole proprietorship

Joint Hindu Family (HUF)

Partnership

Corporate Form of business enterprises –

Co-operative organisation – Can be converted

into a Producer company.

Company

Limited Liability Partnership (LLP)

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 there

from.

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 proportion of capital to which each member is entitled is his share.

The shares are always transferable although the right to transfer is often more or less restricted. (Lord Justice Lindley)

On the basis of its characteristics, a company can be defined as

“ an incorporated association, which is an artificial person created by law, having a separate entity, with a perpetual succession and a common seal ”. (Haney)

Characteristic Features of a Company 1

Separate Legal entity

– Solomon v Solomon & Co. Ltd

Limited liability of members

Perpetual Succession

Dr. V. K. Jain 10


Separation of ownership from management

Transferable shares

Dr. V. K. Jain 11


Separate Property

Common Seal

Capacity to sue and being sued

Dr. V. K. Jain 12

Lifting the Corporate Veil

Fictional veil between the company & its members

Lifting the veil means disregarding the corporate entity and

paying regard to the realities behind the legal form

When the notion of legal entity is used to defeat public

convenience, justify wrong, protect fraud or defend crime,

the law will disregard the separate legal entity and look

behind the real persons who are in control of the company.

Dr. V. K. Jain 13

Under Statutory Provisions

1. Reduction of membership below the statutory minimum (sec. 45)

2. Misrepresentations in prospectus (sec.62 & 63)

3. Failure to return application money (sec. 69)

4. Misdescription of name (sec. 147)

5. Piercing the veil in holding and subsidiary company relationships

6. Company under investigation

7. Fraud during winding up

8. For ultra vires Act

9. For violations of the provisions of other statues

Dr. V. K. Jain 14

Under judicial decisions

1. Lifting corporate veil in tax matters

2. Lifting corporate veil where company is used for evasion of personal and

statutory obligation

3. Lifting corporate veil for determination of the enemy character of the company

4. Lifting corporate veil in associated companies

5. Lifting corporate veil where company is used to avoid welfare legislation

6. Lifting corporate veil where body corporate is used to commit fraud or improper

conduct

7. Lifting corporate veil for determining technical competence of the company

Dr. V. K. Jain 15

Difference Between Company & Body Corporate

Dr. V. K. Jain 16

Body Corporate or corporation is wider than the

term company

It has three distinct attributes:

Separate legal personality

Perpetual succession

Common seal

Dr. V. K. Jain 17

Body corporate does not include a corporation solea co-operative society

Includes foreign company, PFI, N.Bank, AOP declared as a Body Corporate by Central Government. e.g ONGCCorporation formed under Act of Parliament or State Legislature.

Dr. V. K. Jain 18

Is a Company a property of the shareholders?

No. The company is not the property of its shareholders. All

the property in the name of the company is its separate

property which is controlled, managed and disposed of by

the company in its own name. Thus the company is the

owner of its assets and capital.

Moreover, the company being a separate legal person, it

cannot be construed as property of the shareholders.

Dr. V. K. Jain 19

Second Session

Kinds of Companies 1

A. The Companies not covered by the Companies Act, 1956

B. The Companies covered by the Companies Act, 1956

Companies not covered by the Companies Act

Statutory companies

Chartered Companies



Companies covered by the Companies Act

– Private Company - Sec 3 (1) (iii)

– Public Company - Sec 3(1)(iv)

These companies may be:

1.Companies with liability limited by shares

2.Companies with liability limited by guarantee iii)

3.Companies with unlimited liabilities (Unlimited

Companies)

Dr. V. K. Jain 22


On the basis of nature, form and functions.

I. Companies not for profit

ii. Government. companies

iii. Foreign companies

iv. Holding and subsidiary companies

v. Producer company




Public Private

Covered by the Companies Act

Statutory Charted

Not covered by the Companies Act

Other Companies – On the basis of nature form & functions1.Companies not for profit2.Government Companies3.Foreign Companies4.Holding & Subsidiary Companies

These companies may be:1.Companies limited by shares2.Companies limited by guarantee3.Unlimited Companies

Private Companies

Minimum2

Maximum 50

1. Number of

Members

Restricted

2. Transfer of

Shares

No public Offer

for Shares or

Debentures

3. Invitation

for Public

Subscription

Not allowed from persons other than its members, directors or their relatives

4. Invitation or

Acceptance of

Deposits

A PRIVATE COMPANY

Means a Company which has a minimum paid-up

Capital of Rs. 1.00 lacAND

Private Companies

Advantages and Privileges of Private Companies

i) Formation

ii) Business

iii) Meetings

iv) Board of Directors

v) Share issue

vi) Miscellaneous


Public Companies


Distinction of a Private Company and a Public Limited Company

Number of Members

Minimum paid up capital

Number of Directors / Retirement

Transfer of Shares

Public Subscription / Deposits

Commencement of business

Allotment of Shares

Statutory Meeting

Managerial Remuneration

Audit committee

Quorum and interested directors

Dr. V. K. Jain 28

Other Companies

Government company [Sec 617]

Foreign Companies [Sec 591]

Holding and subsidiary Companies [Sec. 4]

Companies not for profit (or Association not for profit) [Sec

25]

Investment company

Producer company


Government company [Sec 617]

A Government company is a company in which not

less than 51% of the paid up share capital is held.

1. by the Central Government , or

2. by one or more State Government, or

3. partly by Central Government and partly by State

Government.

Foreign Companies [Sec 591]

A foreign company is a company, which is incorporated outside India but

has a place of business in India.

It is place of incorporation, which determines the foreign character of a

company. Thus, a company incorporated outside India but having a place

of business in India would be regarded a foreign company even though all

the members might be Indian citizens.

The Companies Act lays down certain special provisions applicable to

foreign companies. A foreign company if it ceases to carry on business in India,

may be wound up as an unregistered company.

Holding and subsidiary Companies [Sec. 4]

Which holds more than half of the nominal value of the equity share capital of

another company (subsidiary company) For example, if 'H' company hold 51%

of the nominal value of the equity capital of 'S' company, then 'H' company is

said to be a holding company and 'S' company is a subsidiary company. or,

Which controls the composition of the board of directors of another company

(subsidiary company). The company which is so controlled by the holding

company is known as Subsidiary Company. Control involves the power to

appoint all or majority of the board of directors without the consent of some

other person.

A company shall be deemed to be a subsidiary company of another if it is a

subsidiary of a third company which itself is a subsidiary of the controlling

company.

Examples of Holding and Subsidiary

Steel Authority of India (SAIL) – Holding company - Bhilai Steel Plant – Subsidiary company - Rourkela Steel Plant – Subsidiary company- Bokaro Steel Plant – Subsidiary company

Coal India Ltd. - WCL – Subsidiary company- BCCL – Subsidiary company- SCCL – Subsidiary company

Companies not for profit (or Association not for profit) [Sec 25]

It is formed to promote commerce, art, science, religion, charity or any

other useful object.

It prohibits payment of any dividend to its members and applies its

profits or other income in promoting its objects.

It obtains a license from the Central Government to be registered as a

limited company without being required to use the word "limited" or

private limited to their names. (e.g., Institute of Company Secretaries

of India, was originally 'an association not for profit'. Now it is a

statutory body).

Investment company

Sec 372 (10) of the Companies Act, 1956 defines an

investment company as a "a company whose

principal business is the acquisition of shares, stocks,

debentures or other securities".

Producer company

A producer company is a company which is incorporated under

section 581C of the Companies Act and is engaged in any activity

connected with any primary produce.

such as produce of farmers arising from agriculture, forestry, forest

products, floriculture, etc. and produce of person engaged in

handloom handicraft and other cottage industries.

The name shall include the words “Producer Company Ltd.” as the

last words.

Illegal Association [Sec 11]

No company, association or partnership consisting of more than 10

persons for the purpose of carrying on the business of banking and

more than 20 persons for the purpose of carrying on any other

business can be formed unless it is registered under the Companies

Act or is formed in pursuance of some other Indian Law

Exceptions

Associations ‘not for profit-making’

Joint Hindu Family


An association or partnership is an illegal association if all the

following conditions are satisfied :

– The number of persons carrying on business exceeds 20 (10 persons in

case of banking business).

– It is formed for the purpose of earning profits.

– It is not registered under the Companies Act or formed under any

other Indian law (e.g. Cooperative Societies Act ,Trust Act).

– It is not a Joint Hindu Family (i.e., an HUF is not an illegal association

even if he number of members exceed 20 or 10, as the case may be).

Effects of an illegal association

Conversion of Companies

Conversion of private company into a public company– Conversion by default [Sec. 43]

– Conversion by operation of law

– Conversion by choice [Sec. 44]

Conversion of a public company into a Private company– Defunct Company

Dr. V. K. Jain 39

Administration of Companies Act - I


Registrar of Companies

Regional Director

Central Government( Ministry of Corporate Affairs)

Jurisdiction of Courts

Dr. V. K. Jain 41

National Company Law Tribunal

National Company LawAppellate Tribunal

Suprem e C ourt

The jurisdiction of company law board and High Court is sought to be replaced

3. Documents for Incorporation 1

Following documents are to be submitted electronically as

scanned attachment to E-Form No. 1. After submission, a SRN

(Service request number) will be generated by the system

– MEMORANDUM OF ASSOCIATION duly signed by the minimum

number of subscribers, stamped and witnessed

– ARTICLES OF ASSOCIATION, which should be similarly signed,

stamped and witnessed


Documents for Incorporation 2

– A STATUTORY DECLARATION stating that all the provisions of

Companies Act,1956 with regard to registration have been

complied with.Section 33(2). The declaration should be in FORM

NO. 1 on a non-judicial stamp paper of appropriate value. Digital

Signature of the applicant in Form No. 1 on the last page

– The PARTICULARS OF DIRECTORS, etc. in FORM NO. 32. This Form

32 can be filed either at the time of registration of a company or

within 30 days of incorporation.

• Digital Signature of Applicant and Practicing CS, CA, CWA


Documents for Incorporation 3– NOTICE OF REGISTERED ADDRESS of the company in FORM NO. 18 This Form

can be filed either at the time of registration of a company or within 30 days of

incorporation.

• Digital Signature of Applicant and Practicing CS, CA, CWA – POWER OF ATTORNEY signed by all the subscribers, authorising one or more

persons to act as their representative(s) to make amendments and/or

alterations in memorandum and articles of association and other forms and

papers filed before ROC, for incorporation and also to collect the certificate of

incorporation


Documents for Incorporation 4

Under the new MCA-E Governance System the soft copy of all the

above documents is to be filed electronically through the MCA

website.

The registration fees is paid through challan

in the authorised Bank or through credit card.


Form 1: Application and declaration for

incorporation of Company


Form 18:Notice of situation

or change of situation of

registered office


Form 32:Particulars relating

to Directors


In the case of a public company having share capital, in addition to the above, written consent of all those persons who have agreed to act as directors is required to be given

CERTIFICATE OF INCORPORATION: After scrutinizing the documents and on being satisfied that they are in order, the R.O.C. issues the certificate of incorporation. By post at the company’s registered office


The certificate of incorporation is conclusive as to all

the requirements of the Act with respect to

registration and matters precedent and incidental

thereto having been duly complied with


Certificate of Incorporate


4. Company Documents

4.1 Memorandum of Association

4.2 Articles of Association

4.3 Prospectus


4.1. Contents of Memorandum The basic conditions, as per section 13 are as follows :-

Name Clause

Situation Clause (Domicile clause or Registered office clause)

The objects clause of the memorandum of association of a company is split up as follows:

– main objects of the company

– objects incidental or ancillary to the attainment of main object &

– any other objects

Liability Clause

The Capital Clause

Subscription Clause


4.2. Doctrine of Ultra Vires

The word ‘ultra’ means beyond and the word ‘vires’ means the

powers. Ultra vires, therefore, means beyond the powers. Any

act beyond the objects stated in the memorandum is ultra vires

the company and thus void.

Effects of ultra vires transactions:

- Ultra vires contracts are void ab initio

- Injunction:

- Personal liability of Director


4.2. Articles of Association

What you should know :

4.1 Meaning of Articles and its relationship with memorandum

4.2 Contents of Articles of Association

4.3 Alteration of Articles

4.4 Binding effects of Articles

4.5 Doctrine of constructive notice

4.6 Doctrine of Indoor Management


56

What you should know :5.1 Prospectus: What it is and why it is issued?

5.2 Various methods of raising of share capital

5.3 What are the statutory requirements for the issue

of prospectus?

5.4 Contents of prospectus

5.5 Statement in lieu of prospectus

5.6 Shelf prospectus

5.7 Information memorandum (book building)

5.8 Is there any liability f or mis-statement in

prospectus?.

5.9 What is the requirement to be satisfied for listing

of shares with SEBI?

4.3. Prospectus

57

What it is and why it is issued?Means any document, described or issued as a prospectus and includes any notice, circular advertisement or other document inviting deposits from the public or inviting offers from the public for the subscription or purchase of any shares, or debentures of, a body corporate.

Prospectus Invitation to offer

Application for shares Offer

Allotment of shares Acceptance of the offer,

resulting in a binding contract.

58

ISSUES

Public Rights Preferential

Initial Public Offering (IPO)

Further Public Offering (FPO)

Fresh Issue Offer for Sale Fresh Issue Offer or Sale

5. Allotment of Shares Allotment may be defined to mean the appropriation by the Board of Directors of the company out of the previously unappropriated capital of the company of a certain

number of shares to persons who have made applications for shares.

Allotment results in a binding contract ,since it amounts to acceptance of offer

An allotment to be valid :

should be made by proper authority, namely, the board of directors or a committee authorised by the Board.

should be against application in writing,

should not be in contravention of any other law and

must be made within a very reasonable time and communicated to the applicant.

Besides, an allotment to be valid must comply with the provisions of -

section 60 ( registration of prospectus on or before the date of its publication ),

section 69 ( application money to be not less than 5% of the nominal amount of the share, moneys to be kept deposited in separate bank account, minimum subscription

),

section 70 ( Statement in lieu of prospectus to be filed at least three days before the allotment ),

section 73 ( listing of shares on one or more recognised stock exchange (s) and refund of the moneys in case listing is refused, refund of over-subscription within 8 days

of the closing of the issue).

Min

Allotment to be valid :

should be made by proper authority, namely, the board

of directors or a committee authorised by the Board.

should be against application in writing,

should not be in contravention of any other law and

must be made within a very reasonable time and

communicated to the applicant.

Restrictions on Allotment Besides, an allotment to be valid must comply with the provisions of -

section 60 ( registration of prospectus on or before the date of its publication ),

section 69 ( application money to be not less than 5% of the nominal amount of the share,

moneys to be kept deposited in separate bank account, minimum subscription ),

section 70 ( Statement in lieu of prospectus to be filed at least three days before the

allotment)

section 73 ( listing of shares on one or more recognised stock exchange (s) and refund of

the moneys in case listing is refused, refund of over-subscription within 8 days of the closing

of the issue).

Min

Restrictions on allotment (cont.)

section 73 ( listing of shares on one or more

recognised stock exchange (s) and refund of

the moneys in case listing is refused, refund

of over-subscription within 78 days of the

closing of the issue).

Minimum subscription of 90% is to be

received in case of public / right issue.

Effect of irregular Allotment.

Sec 60 default- Fine upto 50,000.

Sec 69/70 default- allotment voidable

Sec 73 default- allotment Void.

RETURN AS TO ALLOTMENT.

6. Buy back of Shares

What is buy back ?

It is the offer of the company to the shareholders to

purchase their shares

Why buy back ?

-To Improve shareholder value

- As a defence mechanism

- Management signalling.

A. Pre- conditions for buy- back.

Authorised by the Articles.

Upto 25% of the total paid-up capital and free reserves.(net

worth)

Debt-net worth ratio is not more than 2:1 after buy-back.

Shares for buy-back are fully paid up.

If the buy-back is for more than 10% of the paid-up capital, a

special resolution through postal ballot has to be passed. For less

than 10%, board resolution will do.

B. Restrictions for buy-back No buy back

- through any subsidiary.

-through any investment company.

-if default subsists in int.payments etc…

-non complaince of sec. 159,207,and 211.

C. Sources of funds for buy-back [section 77A(1)

Buy-back may be out-of

• (I) its free reserves

• (ii) the securities premium account

• (iii) the proceeds of any shares/securities

Capital Redemption Reserves Account : If buy-back is out of

free reserves a sum equal to nominal value of shares so

purchased shall be transferred to capital redemption reserves

account Section 77AA

D. Procedure of buy-back of shares • Before buy-back

1. The buy-back is authorised by its Articles

2. A special resolution is passed in

General Meeting authorising the buy-back

3. Details of buy back in notice of the meeting.

4 Declaration of solvency : to be filed in SEBI/ROC

5. Buy back to be completed within 12 months of passing special resolution.

E. Procedure after the buy back.

1 Verification and payment.

2 Extinguishment of securities

3. Public adv. of completion of buy-back. (Applicable to a listed company).

4. Return of buy-back. to ROC, SEBI within 30 days of such completion

5. Register of BUY-back.

6. Cooling period. Prohibition of new issue of shares within

24 months of buy-back (except bonus, conversions)

7. Penalty for default

7. Calls on Shares. A call may be defined as a demand by the company for payment of

part of the issue price of shares or debentures which has not been

paid.

A call to be valid must be made by the directors duly appointed and duly

qualified; against a resolutions passed at the meeting of the Board of

directors

Besides, it must be made on uniform basis and bonafide in the interest of

the company.

-Notice of call must specify the exact amount and the time of payment.

8. Forfeiture of Shares. A company’s articles usually contain a provision to forfeit shares of

a member who fails to pay his calls due. Forfeiture to be valid must be

in accordance with the articles and

against a proper notice,

directors must pass a resolution forfeiting the shares bonafide in the

interest of the company.

A forfeiture has the effect of termination of membership. However, a

person whose shares have been forfeited continues to remain liable as a

past member in case liquidation takes place within one year forfeiture.

9. Surrender of Shares

A company may accept surrender of shares as an

alternative to forfeiture where its articles so permit.

However, surrender of shares shall be valid only where

their forfeiture is otherwise justified.

In any other circumstances, surrender of shares cannot

be accepted without sanction of the court since it would

amount to reduction of capital.

10. Nomination of Shares/ debentures(Sec 109A)

The nomination should be made in prescribed from No.

2B.

The form should be signed by all holders and should be

dated. It should be signed by two witnesses.

Nominee may either register his name

or directly transfer the securities.

11. Transfer of Shares (Sections 108 to 112)

1 Right to transfer shares

2. Procedure of transfer of shares

3. When can company refuse transfer of shares

4. Forged transfer and blank transfer

5.Transmission of shares

6. Transfer of shares under the depositories system

12. Membership

1. Definition of a member

2. Member v. Shareholder

3. Modes of acquiring membership

4. Who may become a member?

5. Termination of membership

6. Rights of a member

7. Liabilities and duties of a member

8. Variation of the rights of a member

13. Management of a Company

1. WHO MANAGE THE COMPANY ?

One of the important features of a company is that there is separation of

ownership from management.

The shareholders do not directly manage. Instead, they elect some

persons from among themselves as their representative to act on

behalf of the company. Such persons are known as directors.

The power to manage however is not entrusted to any single director

but to all the directors, collectively called the Board of Directors.

14. Company meetings

A. Shareholders Meetings

Statutory Meeting.

Annual General Meeting.

Extra Ordinary General Meeting.

Meetings of a class of Members.

B. Directors Meetings

I) Meetings of the Board of Directors.

ii) Meetings of the Committee of Board of Directors.

C. Creditors Meetings

I) Debentures holders Meeting.

ii) Other Creditors Meeting.

15. Statutory Registers / Books to be maintained by a company

49(7) Register of investments - where investments of the company in shares or securities

are not held in its own name.

58A Register of Deposits (Read with rule 6 of the Companies (Acceptance of Deposits)

Rules, 1975.

136 Copy of every instrument creating any charge requiring Registration.

#143(1) Register of charges.

#150(1) Register of members.

#151(1) Index of Members, where their number is more than fifty.

#152(1) Register of Debenture holders.

#152(2) Index of Debenture holders where their number is more than fifty.

157-158 Foreign Register of members and debenture holders.

# To be open for public inspection.

#159-160 Copies of Annual Return.

193-196 Minutes Books of Proceedings of General Meetings and of meetings of

the Board of Directors of Committees of the Board.

209(1) Books of account and Cost Records

301 Register of contracts, Companies and Firms in which the Directors of the

Company are interested.

302 (6) All contracts entered into by the Company for the appointment of a

Manager or Managing Director.

#303(1) Register of directors, manager and secretary.

307 Register of shareholding or debenture holdings of Directors and Manager.

370(IC) Register of loans made and guarantees given or securities provided to

Companies under the same management.

372(6) Register of all investments made by the Company in the shares of any

other body corporate or bodies corporate

Filing of Returns with the Registrar of Companies

Periodical Returns: There are three important

periodical returns. These are:

– Annual Return under section 159 or 160

– Balance Sheet and Profit and Loss Account, under

section 220; and

– Compliance Certificate under section 383A.

Filing of Returns with the Registrar of Companies

Returns on occurrence of certain events: These include:

– Return as to allotment in e-form no. 2 (sec. 75)

– Return of directors in e-form no. 32 (sec. 303)

– Return as to Alteration of Memorandum, which requires confirmation

of CLB in e-form no. 21.

– Return as to Alteration of Share Capital in e-form no. 5 (sec. 94)

– Return of Charges in e-form no. 8 and 17 (sec. 125 and 127)

– Return of Resolutions and Agreements in e-form no. 23 (sec. 192)

– Return of Foreign Companies in e-form no. 44 / 49 (sec. 592 / 593)

Annual Return [sec.159 to 162]

Every company having a share capital shall file with the Registrar of companies

an annual return within 60 days from the date of holding of the Annual General

Meeting.

Contents:

Name and registered office address

Capital structure of the company

Directors/ Secretary Information (Past and Present)

Details of shares/debentures held at date of AGM

Details of shares transfers since last date of AGM

Indebtedness of the company

Equity share capital breakup

Books of Account

Section 209 of the Companies Act requires every company

to maintain proper books of account with respect to

receipts and payments,

sales and purchases,

assets and liabilities,

Cost accounting records if applicable.

Books of account to be kept at the Registered office.

What do you mean by Proper Books of Accounts?

Books which give true and fair view of the state of affairs of the

company

The books of account explain the transactions; &

The books of account are kept on accrual basis and according to the

double-entry system of accounting.

The accounts are prepared as per accounting standards.

Authentication of Accounts

Every B/S and P&L a/c is required to be signed, on behalf of the Board of directors, by its manager or secretary, if any, and by not less than two directors of a company one of whom must be the managing director where there is one.

Board’s Report

At the Annual General Meeting one of the matters to be

considered is the report of the Board of Directors.

Section 217(1) requires that a report of Board of Directors

should be attached to the balance sheet laid before the

AGM. While drafting the Directors’ report the provisions of

Companies (Disclosure of Particulars in the Report of Board

of Directors) Rules, 1988 and Companies (Particulars of

Employees) Rules, 1975 should be complied with.

company law 2012-

Business

company lawdr

corporate veil fictional

new companies act

new company lawbill

study company law

body corporate

intoa producer company

number of companies