COMPANY LAW-1
What is a company?
A company is an artificial person; legal entity.
Why we call it artificial person?
It is also an independent body like any other person. The
shareholders/promoters are different from a company they have started. If you
are cheated by the accompany, you can go to court against COMPANY only NOT
AGAINST SHARE HODERS/PROMOTERS. You can treat and contract with it as if you
are approaching a live co-being/ another business man.
That is why we call it an artificial person.
Why we call it a legal entity/person?
It is created by law-The companies Act 1956 or statutes
(special laws.)
Whether a company can be dissolved by share
holders/promoters/sponsors?
NOOOoo. You have go to court and apply for dissolution.(
Remember it is created by law and so naturally it must be dissolved by law
only. So, company has to file application for dissolution in HIGH COURTS.
COMPANY LAW-2
Raj and friends, from a rural village, came to your bank.
They gave the following documents to open an account for their company.
- Memorandum of association.
- Articles of Association.
- Lease deed duly registered in the sub-registrar’s office for address proof.
- An affidavit for the name of the company
- Application signed by Raj as MD and Two more people as directors.
Your Assistant Manager, a newly
appointed officer, authorized the opening.
But the manager of the branch
declined the opening of the account.
He found out some important legal
confirmation/certification is missing.
WHAT IS IT?
Find it out OR expect a reply in next post. Okay!
COMPANY LAW-3: A company is
born!!
If you have not read company law-2, please go to it and come back here because this is going to be the continuation of that one. If you do not like to read it, go to the line after the next one.
The missing document is CERTIFICATE of INCORPORATION.
How a company is started?
Some people like us sit together and set forming ideas, purpose, finance e.t.c
1. They finalize the objective of the company.
2. OBJECTIVE is what the company is going to do;
3. then, baptize and name the company.
INFOSYS Narayanmoorthy and his friends might have done the same, SOME 30 YEARS AGO IN PUNE: Objective was:-software and applications.
4. They might have fixed capital-total CAPITAL- needed and who were the contributors and how much each.
5. Need an office. Isn't it? So, offices address is discussed and fixed.
(FOR REGISTRATION: MENTION OF STATE IS ENOUGH. BUT, WITHIN 30 DAYS OF REGISTRATION, THEY HAVE TO GIVE THE ADDRESS)
Okay...this is called MEMORANDUM OF ASSOCIATION.
Then, they prepare ARTICLES OF ASSOCIATION which tells about the bye-laws, rules and INTERNAL regulations.
(ONE OF THE IMPORTANT THING, IT DEALS IS- TRANSFER OF SHARES)
So, now you are ready with MOA and AOA, Walk to the nearest Registrar of companies (ROC). Give your application. You will be given CERTIFICATE OF INCORPORATION - Birth certificate of the company-AADHAR OF THE COMPANY.
If you have not read company law-2, please go to it and come back here because this is going to be the continuation of that one. If you do not like to read it, go to the line after the next one.
The missing document is CERTIFICATE of INCORPORATION.
How a company is started?
Some people like us sit together and set forming ideas, purpose, finance e.t.c
1. They finalize the objective of the company.
2. OBJECTIVE is what the company is going to do;
3. then, baptize and name the company.
INFOSYS Narayanmoorthy and his friends might have done the same, SOME 30 YEARS AGO IN PUNE: Objective was:-software and applications.
4. They might have fixed capital-total CAPITAL- needed and who were the contributors and how much each.
5. Need an office. Isn't it? So, offices address is discussed and fixed.
(FOR REGISTRATION: MENTION OF STATE IS ENOUGH. BUT, WITHIN 30 DAYS OF REGISTRATION, THEY HAVE TO GIVE THE ADDRESS)
Okay...this is called MEMORANDUM OF ASSOCIATION.
Then, they prepare ARTICLES OF ASSOCIATION which tells about the bye-laws, rules and INTERNAL regulations.
(ONE OF THE IMPORTANT THING, IT DEALS IS- TRANSFER OF SHARES)
So, now you are ready with MOA and AOA, Walk to the nearest Registrar of companies (ROC). Give your application. You will be given CERTIFICATE OF INCORPORATION - Birth certificate of the company-AADHAR OF THE COMPANY.
Company law-4
A new company was born last week.
(Ref: previous post)
What type of company that can be?
Let us get help from our
Narayanamoorthy of INfosys.
Initially, the number of
members/contributors to INFOSYS might be within 50
only.
Then, Infosys might have been
registered as PRIVATE LIMITED.
If
they issued any shares to EMPLOYEES in addition to the 50, it does not affect
the status-PRIVATE LIMITED.
When they started growing, they
might have become PUBLIC LIMITED- means that the members/shareholders ARE
GREATER THAN 50 IN NUMBER. The issue is to public and another condition is they
have to be listed in any of the stock exchanges.
INFOSYS must have applied for
CERTIFICATE OF COMMENCEMENT OF BUSINESS. This is a MUST FOR PUBLIC LIMITED.
So, now
remember, if you plan to start a company-a public limited
You have to prepare:
1. MEMORANDAM OF ASSOCIATION
2. ARTICLES OF ASSOCIATION
Apply for
- CERTIFICATE OF INCORPORATION with ROC (registrar of companies)
- CERTIFICATE OF COMMENCEMENT OF BUSINESS FROM ROC.
Minimum
members-7 INCLUDING min directors-3.
PRIVATE LTD:
MIN: 2 members INCLUDING
2 directors
Don’t need certificate of commencement and
listing IN ANY OF THE EXCHANGES.
Shall we see in next post
the doctrines of corporate veil, ultra vires, constructive notice and
indoor management?
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