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Companies Act, 2013, Types of Capital, Effects of Registration - Coggle…
Companies Act, 2013
Unit 2 - Classes of Company
On Basis of Members
Private Company
OPC
Section 2(62)
Only one person as member
Memorandum
Event of death or incapacity
Consent
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Who can be?
Natural person
Indian citized
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How many?
Only one OPC
Only one nominee
Restrictions
Cannot be converted into Section 8
Cannot carry NBFI
Small Company
Section 2(85)
Is a private company
Paid up capital < 40 lakhs
Last year Turnover < 4 crores
But not a
Section 8 company
Holding company
Subsidiary company
Private Company - section 2(68)
No Min Paid Capital
Max member is 200
righ to Transfer shares restricted
Invite public to subscribe to shares - Not allowed
Public Company
Section 2(71)
No min Paid up capital
Min number 7
Max Unlimited
Shares freely transferable
Subsidiary of public co is a public co
On basis of Liability
Limited by shares
Section 2(22)
Liability of members is limited
Upto the unpaid amount of shares they hold
Any time during lifetime of company
Limited by Guarantee
Section 2(21)
Liability of members is limited
Upto the stipulated amount in MOA
Only in the event of winding up
Unlimited
Section 2(92)
On basis of Control
Holding Co
Section 2(46)
Company that has one or more
subsidiary companies.
Subsidiary Co
Section 2(87)
Company in which Holding Company
Controls
Composition
BOD
Majority of BOD
Voting Power
More than one-half
Either
On its own
Together with one or more
subsidiary companies
OR
OR
Associate Co
Section 2(6)
Company has
significant influence
What is Significant influence?
Control over business decisions through an agreement
Control of 20% to 50% of voting power
OR
BUT NOT A SUBSIDIARY COMPANY
Includes JV
On basis of access to Capital
Listed Co
Section 2(52)
Company which has any of its securities
listed on any
Recognised Stock exchange
Unless SEBI states they are not
Unlisted Co
All Companies other than Listed
Other companies
CDFGHIPFI
Govt. Company
Section 2(45)
Company in which atleast 51%
Held by Central Govt or Statement Govt
Includes subsidiary of Govt company
ForEign Company
Section 2(42)
Is a Company
Incorporated
Outside India
which
Has a
place of business
in India
AND
By itself
OR
Physically
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Through an agent
Electronically
Conducts
any business In India
Body Corporate
OR
Charitable Company
Section 8
Promote charitable objects
Commerce
Science
Arts
Prohibits payment of dividends to member
Why?
Every Investment has a specific Return
If I give a Loan
Return?
Interest income
If I invest in shares
Return?
Dividend income
NidHI Company
PFI
Section 2(72)
LIC of India
IDFC
UTI
Dormant Company
Section 455
Covers 2 types of Companies
Type 1
Formed for a
Future
project
Formed to
Hold an asset/ IP
AND
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OR
Type 2 - Inactive
During last 2 Financial years
Have not carried any business
OR
Have no significant accounting transaction
Has not filed financial statements
OR
Who can make application
With Registrar
To get Dormant Status
CALMO
Unit 3 - Incorporation
Promoter
Section 2(69)
Prospectus
OR
Annual Return
OR
Control Affairs
Directly or Indirectly
OR
BOD Advice
Docs for Incorporation
MOA & AOA
Signed by subscribers
Declaration that Rules complied
Signed by
Lawyer or CA or CS or cost accountant
AND
Person in articles named as Director/ Manager/ Secretary of company
Address for correspondence
Particulars of every MOA subsriber
Names + Surname + Family name + Address + Nationality + Proof of IDentiy
Particulars of person mentioned in Articles as MOA subscriber
Names + DIN + Surname + Family name + Address + Nationality + Proof of IDentiy
Particulars of of Person mentioned in Articles as first director - Particular of what?
Interest in other firms
Along with their consent to act as director
Declaration from Directors
They are not guilty of fraud or mis conduct and documents submitted are true
Certificate of Incorporation
Unique Corporate Identification Number (CIN)
Maintain documents at Registered office
Till Dissoution
Section 447
At the time of registration
If false/ incorrect information is produced
Liable for fraud
Company already incorporated
Tribunal can pass order
To manage the company
Remove name from Register
Wind up the company
Make it Unlimited
Unit 1 - Nature of Company
Double CALLS PLEM
Characteristic
Artificial person
3 Separate
Legal Entity
Management
Property
Limited Liability
Succession Perpetual
Shares Transferability
Common Seal
Capacity To sue & be Sued
AOP
Corporate Veil
What is it?
Corporate Curtain
Piercing the veil
Action
Taken By whom?
Court
To Hold
Personally liable
Corporate shareholders
Towards what?
Debts and Liabilities of company
Case Laws
Sir Dinshaw Manackjee Petit
Protection of Revenue
To avoid taxes
Workmen vs Associated Rubber Industries Ltd,
Avoiding Labour Welfare
Gilford Motor Company vs Horne
Avoiding Legal obligation or if Company is sham
Daimler Co Ltd vs Continental Tyre & Rubber Co
Determine character of company
Merchandise Transport Ltd vs British Transport Commission
Form subsidiaries to act as agents
Section 3A)
Definition
Section 2(20)
Types of Capital
Authorised
Mentioned in the MOA
Only is the max capital that company can raise
Issued
Subscribed
Called up
Paid Up
Effects of Registration
Section 9
Effect 1
No longer individual
All Subscribers become Body Corporate
By the name given in MOA
Effect 2
Capable of exercising all functions
as Incorporated Company
Effect 3
Perpetual Succession
Never Ending succession
Untill it is disolved/ struck from register
Effect 4
Power to acquire/ Hold/ dispose
Movable/ immovable/ Tangible/ Intangible
Binding Contract between members and company
Hari Nagar Sugar Mills Ltd. vs. S.S. Jhunjhunwala
Company A purchases shares of Company B
A now controls B
But still Legal Character of B will continue
Spencer & Co. Ltd. Madras vs. CWT Madras
Even if Govt of India holds shares of another company
Does not make a company agent of the Govt
Heavy Electrical Union vs. State of Bihar