lec 02 company act

7/29/2019 Lec 02 Company Act

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Types of Company


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On the basis of IncorporationChartered Company

A Company incorporated under a special charter granted by the Queen ofEngland is called CharteredCompany.

The Company is regulated by its Charter. The Charter also prescribe thenature of Business and the power of the Company.

Examples : East India Company and Bank Of England

A Statutory Company is one which is created by a Special Act ofParliament or a state legislature for achieving the purpose of public utility.The nature and the power of such companies are laid down in the specialAct under which they are created.

Memorandum of Association is not required. Not required to Use limited after its name. Examples : RBI, LIC, State Bank of India.

Statutory Company


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On the basis of IncorporationRegistered Company

A Registered Company is one which is registered in accordance with the

provisions of the Companies Act, 1956 and includes the existing Companiesformed under any other law.

Comes into existence by receiving the certificate of Incorporation.

Governed by the Companies Act ,1956.

Registered Company may be PRIVATE OR PUBLIC COMPANY.

Section 3(1)(iii):

A Private Company means a company which has a minimum paid up capital

of Rs. 1,00,000/- or such higher paid up capital as may be prescribed by its

articles.

Section 3(1)(iv): Public company means a company which is Either-

not a private company and has a minimum paid-up capital of Rs. 5,00,000 or

such higher paid-up capital as may be prescribed;

Is a private company which is a subsidiary of public company.


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On the basis of incorporation

Company not for Profit

According to Section 25, the Central Government may by licensegrant that an association may be registered as a company withlimited liability, without using the words limited or pvt ltd as apart of its name.

An association must satisfy the following condition;

a) The association about to be formed as a limited company aimsat the promotion of commerce, art, science, religion, charity,or any other useful objective ;

b) It intends to apply its profits, if any, for promoting its objects;

andc) It prohibits the payment of dividend to its members.

Central Govt. has a power to revoke the license of such company.


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On the basis of LiabilityLimited by shares [Section 12(2)(a)]

A company limited by shares is a company in which the liability of its

members is limited by its Memorandum to the amount unpaid on the sharesrespectively held by them.

It may either public or private Company.

If member of the company pays a full amount on shares then his liability

would be nil.

Such liability can be enforced either during the lifetime or during the winding

up of the company.

Liability of its members is limited by its Memorandum to such amount as the

members may respectively undertake to contribute to the assets of the

company in the event of its being wound up.

For the purpose of Commerce, science, art, religion, charity or any other

useful objects.

Such liability can be enforced only after the commencement of winding up of

the company and not during the lifetime of it.

Limited by Guarantee [Section 12(2)(b)]


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On the basis of LiabilityUnlimited Company [Section 12(2)(c)]

An unlimited company or private unlimited company is a hybrid company

incorporated either with or without a share capital (and similar to its limited

company counterpart) but where the liability of the members or shareholders

is not limited - that is, its members or shareholders have a joint, several and

unlimited obligation to meet any insufficiency in the assets of the company in

the event of the company's formal liquidation.


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On the basis of ControlGovernment company [Section 617]

Means any company in which not less than 51% of the paid up share capital is

held by the Central Government or any State Government or partly by the

Central Government and partly by the one or more State Governments.

Government Companies are also governed by the provisions of the Companies

Act. However, the Central Government may direct that certain provisions of

the Companies Act shall not apply or shall apply only with such exceptions,modifications and adaptions as may be specified to such government

companies.

Even a subsidiary company of Government is regarded as a government

Company.

Example: HAL, BEL

Non-Government company [Section 617]


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On the basis of ControlHolding and Subsidiary Company

The term Holding and Subsidiary are interrelated.

A company shall be deemed to be subsidiary of another company if :-

That other company controls the composition of its board of directors ; or

That other company holds more than half in face value of its equity share

capital

The control of the composition of the Board of Directors of the companymeans that the holding company has the power at its discretion to appoint or

remove all or majority of directors of the subsidiary company without consent

or concurrence of any other person.

If Company B is subsidiary of the Company A and Company C is subsidiary of

Company B, therefore Company C is subsidiary of Company A.

A subsidiary cannot purchase even a single share of its holding company after

1-4-1956 after it became its subsidiary.


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On the basis of ControlForeign Company

Means a company incorporated in a country outside India under the law of

that other country and has established the place of business in India.

Copys of memorandum, articles etc. must be filed by every foreign companies

act at the following two places:

a. R.O.C at New Delhi

b. R.O.C at the state where the company was principle place of business.

Domestic Company

lec 02 company act

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