COMPANIES ACT 1956
Company means-An association of persons united for a
common object.
A Company formed and registered under Companies Act or an existing Company.
Characteristics• Incorporated Association• Separate Legal Entity• Limited Liability• Separate Property• Perpetual Succession• Transferability of shares• Common Seal• Capacity to sue and be sued
Companies
Incorporated
Chartered
Statutory
Registered
Companies Limiter By
shares
Public Private
Companies limited by Guarantee
Public Private
Unlimited Companies
Public Private
Unincorporated
Public Company Private Company
Min. Members 7 2
Max. Members No limit 50
Restriction on Name Limited Pvt Limited
Commencement of Business
After certificate of commencement of Business
After Incorporation
Invitation to Public Yes No
Transferability of Shares
Free Not Free
Issue of Share Warrants
Yes No
No of Directors Min 3 Min 2
Statutory Meetings Must No Compulsion
Quorum 5 2
FORMATION OF COMPANY Promotion Incorporation
Availability of Name Minimum paid up Capital Documents to be filed with registrar Certification of Incorporation
Floatation or Raising of Capital Commencement of Business
Memorandum of Association Is the foundation on which the structure of the
company is based.
It contains the fundamental conditions upon which alone the company is allowed to be incorporated
Its five clauses provide the basic features of the company’s constitution.
A company cannot depart from the provisions contained in its Memorandum, however great the necessity maybe.
PurposeIntending shareholder can find out from the
memorandum the field in, or the purpose for which the money is going to be used by the company and what risk is he taking in making the investment.
Any one dealing with the company shall know whether the contractual relation into which he is entering with the company is one relating to a matter within its corporate objects.
ClausesName Clause
Registered office Clause
Object Clause
Liability Clause
Capital Clause
DOCTORINE OF ULTRA VIRES‘Ultra’ means beyond, ‘Vires’ means
power.
Any activity not authorised by the memorandum is ultra vires the memorandum.
Consequences of Ultra ViresInjuction
Breach of warranty of authority
Personal Liability of Directors
Ultra Vires Contracts
Articles of AssociationThe articles of association are the rules and
regulations of a company framed for the purpose of management of its internal affairs.
It defines the powers of its officers.
The Articles usually contain following mattersNumber and value of sharesAllotment of sharesCalls on sharesForfeiture of sharesBorrowing powersDirectors, their appointment etc.MeetingsVoting Rights etc
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