INDEX LIST OF SECTIONS UNDER COMPANIES...

3 | P a g e CA Amit Talda M: 9730768982 http://taldalearningcentre.webs.com/

INDEX

LIST OF SECTIONS UNDER COMPANIES ACT, 2013 .................................................................... 5

LAW DICTIONARY ..................................................................................................................... 15

UNIT1: INTRODUCTION ............................................................................................................. 16

UNIT 2: TYPES OF COMPANIES ................................................................................................. 28

UNIT 3: PROMOTION AND INCORPORATION OF COMPANY ....................................................... 39

UNIT 4: MEMORANDUM AND ARTICLES OF ASSOCIATION ........................................................ 49

UNIT 5: CONTRACTS &CONVERSIONS ...................................................................................... 63

UNIT 6: MEMBERSHIP ............................................................................................................... 65

UNIT 7: CONCEPT OF CAPITAL& FINANCING OF COMPANIES .................................................. 70

UNIT 8: PRIVATE PLACEMENT &PROSPECTUS ......................................................................... 89

UNIT 9: DEBT CAPITAL .............................................................................................................. 99

UNIT 10: CREATION & REGISTRATION OF CHARGE ................................................................ 106

UNIT 11: ALLOTMENT AND ISSUE OF CERTIFICATES .............................................................. 111

UNIT 12: TRANSFER & TRANSMISSION OF SHARES ................................................................ 120

UNIT 13: GENERAL MEETINGS ................................................................................................ 128

UNIT 14: DEPOSITS ................................................................................................................. 142

UNIT 15: DIVISIBLE PROFITS &DIVIDEND ................................................................................ 147

UNIT 16: ACCOUNTS & AUDIT ................................................................................................. 153

UNIT 17: INSTITUTION OF DIRECTORS ................................................................................... 187

UNIT 18: INDEPENDENT DIRECTORS ...................................................................................... 202

UNIT 19: BOARD MEETINGS & ITS POWER .............................................................................. 208

UNIT 20: KEY MANAGERIAL PERSONNEL................................................................................ 234

UNIT 21: LOAN AND INVESTMENTS ........................................................................................ 246

UNIT 22: LIMITED LIABILITY PARTNERSHIP ............................................................................ 250

UNIT 23: BOARD’S REPORT & DISCLOSURES ......................................................................... 258

UNIT 24: REGISTER & RETURNS ............................................................................................. 261

UNIT 25: INSPECTION & INVESTIGATION ................................................................................ 267

UNIT 26: WINDING – UP OF THE COMPANIES .......................................................................... 275

UNIT 27: PRODUCER COMPANIES (AGRI COMPANIES) ........................................................... 282

UNIT 28: MERGER, DE-MERGER, AMALGAMATION, COMPROMISE AND ARRANGEMENT – AN

OVERVIEW .............................................................................................................................. 286

UNIT 29: MAJORITY RULES & MINORITY RIGHTS .................................................................... 295

UNIT 30: STRIKING OFF NAME OF COMPANIES ....................................................................... 301

UNIT 31: INTRODUCTION TO E-GOVERNANCE & XBRL ........................................................... 304

UNIT 32: NATIONAL COMPANY LAW TRIBUNAL (NCLT) PROVISIONS ..................................... 313

UNIT 33: FOREIGN COMPANIES .............................................................................................. 315

UNIT 34: APPLICATION OF COMPANY LAW TO DIFFERENT SECTORS ..................................... 316


UNIT 35: OFFENCES, PENALTIES & COMPOUNDING ............................................................... 318

BOARD RESULTIONS .............................................................................................................. 320

SECRETARIAL STANDARDS .................................................................................................... 324

QUESTION PAPER JUNE 2017 ................................................................................................. 340

QUESTION PAPER DECEMBER 2016 ....................................................................................... 345

QUESTION PAPER JUNE – 16 .................................................................................................. 348

QUESTION PAPER DEC. 15 ..................................................................................................... 351

QUESTION PAPER JUNE 15 .................................................................................................... 356


LIST OF SECTIONS UNDER COMPANIES ACT, 2013

Chapter I

(1-2)PRELIMINARY

1. Short title, extent, commencement and application.

2. Definitions.

Companies (Specification of definitions details) Rules, 2014

Chapter II(3-22)

INCORPORATION OF COMPANY AND MATTERS INCIDENTAL THERETO

3. Formation of company.

4. Memorandum. 5. Articles.

6. Act to override memorandum, articles, etc.

7. Incorporation of company.

8. Formation of companies with charitable objects, etc.

9. Effect of registration. 10. Effect of memorandum and articles.

11. Commencement of business, etc.

12. Registered office of company.

13. Alteration of memorandum.

14. Alteration of articles.

15. Alteration of memorandum or articles to be noted in every copy. 16. Rectification of name of company.

17. Copies of memorandum, articles, etc., to be given to members.

18. Conversion of companies already registered.

19. Subsidiary company not to hold shares in its holding company.

20. Service of documents. 21. Authentication of documents, proceedings and contracts.

22. Execution of bills of exchange, etc

Companies (Incorporation) Rules, 2014

Chapter III (23-42)

PROSPECTUS AND ALLOTMENT OF SECURITIES PART I.—Public offer

23. Public offer and private placement.

24. Power of Securities and Exchange Board to regulate issue and transfer of securities, etc.

25. Document containing offer of securities for sale to be deemed prospectus.

26. Matters to be stated in prospectus. 27. Variation in terms of contract or objects in prospectus

28. Offer of sale of shares by certain members of company.

29. Public offer of securities to be in dematerialised form.

30. Advertisement of prospectus. 31. Shelf prospectus.

32. Red herring prospectus.

33. Issue of application forms for securities.

34. Criminal liability for mis-statements in prospectus.

35. Civil liability for mis-statements in prospectus.

36. Punishment for fraudulently inducing persons to invest money. 37. Action by affected persons.

38. Punishment for personation for acquisition, etc., of securities.

39. Allotment of securities by company.

40. Securities to be dealt with in stock exchanges.

41. Global depository receipt.

PART II.—Private placement

42. Offer or invitation for subscription of securities on private placement.

Companies (Prospectus and Allotment of Securities) Rules, 2014

Chapter IV (43-72) SHARE CAPITAL AND DEBENTURES

43. Kinds of share capital.


44. Nature of shares or debentures.

45. Numbering of shares.

46. Certificate of shares. 47. Voting rights.

48. Variation of shareholders' rights.

49. Calls on shares of same class to be made on uniform basis.

50. Company to accept unpaid share capital, although not called up.

51. Payment of dividend in proportion to amount paid-up.

52. Application of premiums received on issue of shares. 53. Prohibition on issue of shares at discount.

54. Issue of sweat equity shares.

55. Issue and redemption of preference shares.

56. Transfer and transmission of securities.

57. Punishment for personation of shareholder. 58. Refusal of registration and appeal against refusal.

59. Rectification of register of members.

60. Publication of authorized, subscribed and paid-up capital.

61. Power of limited company to alter its share capital.

62. Further issue of share capital.

63. Issue of bonus shares. 64. Notice to be given to Registrar for alteration of share capital.

65. Unlimited company to provide for reserve share capital onconversion into limited company.

66. Reduction of share capital.

67. Restrictions on purchase by company or giving of loans by it forpurchase of its shares. 68. Power of company to purchase its own securities.

69. Transfer of certain sums to capital redemption reserve account.

70. Prohibition for buy-back in certain circumstances.

71. Debentures.

72. Power to nominate.

Companies (Share Capital and Debentures) Rules, 2014

Chapter V(73-76)

ACCEPTANCE OF DEPOSITS BY COMPANIES

73. Prohibition on acceptance of deposits from public. 74. Repayment of deposits, etc., accepted before commencement of this Act.

75. Damages for fraud.

76. Acceptance of deposits from public by certain companies.

Companies (Acceptance of Deposits) Rules, 2014 Chapter VI (77-87)

REGISTRATION OF CHARGES

77. Duty to register charges, etc.

78. Application for registration of charge.

79. Section 77 to apply in certain matters. 80. Date of notice of charge.

81. Register of charges to be kept by Registrar.

82. Company to report satisfaction of charge.

83. Power of Registrar to make entries of satisfaction and release inabsence of intimation from company.

84. Intimation of appointment of receiver or manager. 85. Company's register of charges.

86. Punishment for contravention.

87. Rectification by Central Government in register of charges.

Companies (Registration of Charges) Rules, 2014

Chapter VII (88-122) MANAGEMENT AND ADMINISTRATION

88. Register of members, etc.

89. Declaration in respect of beneficial interest in any share.

90. Investigation of beneficial ownership of shares in certain cases. 91. Power to close register of members or debenture holders or other security holders.

92. Annual return.


93. Return to be filed with Registrar in case promoters' stake changes.

94. Place of keeping and inspection of registers, returns, etc.

95. Registers, etc., to be evidence. 96. Annual general meeting.

97. Power of Tribunal to call annual general meeting.

98. Power of Tribunal to call meetings of members, etc.

99. Punishment for default in complying with provisions of sections96 to 98. 100. Calling of extraordinary general meeting.

101. Notice of meeting.

102. Statement to be annexed to notice.

103. Quorum for meetings.

104. Chairman of meetings.

105. Proxies. 106. Restriction on voting rights.

107. Voting by show of hands.

108. Voting through electronic means.

109. Demand for poll.

110. Postal ballot. 111. Circulation of members' resolution.

112. Representation of President and Governors in meetings.

113. Representation of corporations at meeting of companies and of creditors.

114. Ordinary and special resolutions.

115. Resolutions requiring special notice.

116. Resolutions passed at adjourned meeting. 117. Resolutions and agreements to be filed.

118. Minutes of proceedings of general meeting, meeting of Board of Directors and other meeting and

resolutions passed by postal ballot.

119. Inspection of minute-books of general meeting.

120. Maintenance and inspection of documents in electronic form. 121. Report on annual general meeting.

122. Applicability of this Chapter to One Person Company.

Companies (Management and Administration) Rules, 2014

Chapter VIII (123-127)

DECLARATION AND PAYMENT OF DIVIDEND

123. Declaration of dividend.

124. Unpaid Dividend Account.

125. Investor Education and Protection Fund.

126. Right to dividend, rights shares and bonus shares to be held inabeyance pending registration of transfer of shares.

127. Punishment for failure to distribute dividends.

Companies (Declaration and Payment of Dividend) Rules, 2014

Chapter IX (128-138)

ACCOUNTS OF COMPANIES

128. Books of account, etc., to be kept by company.

129. Financial statement.

130. Re-opening of accounts on court's or Tribunal's orders.

131. Voluntary revision of financial statements or Board‗s report.

132. Constitution of National Financial Reporting Authority.

133. Central Government to prescribe accounting standards.

134. Financial Statement, Board's report, etc.

135. Corporate Social Responsibility. 136. Right of member to copies of audited financial statement.

137. Copy of financial statement to be filed with Registrar.

138. Internal Audit.

Companies (Accounts) Rules, 2014 Rules for CSR Under Section135

Forms for Chapter IX

Chapter X (139-148)

AUDIT AND AUDITORS


139. Appointment of auditors.

140. Removal, resignation of auditor and giving of special notice. 141. Eligibility, qualifications and disqualifications of auditors.

142. Remuneration of auditors.

143. Powers and duties of auditors and auditing standards.

144. Auditor not to render certain services.

145. Auditors to sign audit reports, etc.

146. Auditors to attend general meeting. 147. Punishment for contravention.

148. Central Government to specify audit of items of cost in respect of certain companies.

Companies (Audit and Auditors) Rules, 2014

Forms for Chapter X Chapter XI (149-172)

APPOINTMENT AND QUALIFICATIONS OF DIRECTORS

149. Company to have Board of Directors.

150. Manner of selection of independent directors and maintenance of data bank of independent directors.

151. Appointment of director elected by small shareholders. 152. Appointment of directors.

153. Application for allotment of Director Identification Number.

154. Allotment of Director Identification Number.

155. Prohibition to obtain more than one Director Identification Number.

156. Director to intimate Director Identification Number. 157. Company to inform Director Identification Number to Registrar.

158. Obligation to indicate Director Identification Number.


160. Right of persons other than retiring directors to stand for directorship.

161. Appointment of additional director, alternate director andnominee director.

162. Appointment of directors to be voted individually.

163. Option to adopt principle of proportional representation for appointment of directors.

164. Disqualifications for appointment of director.

165. Number of directorships.

166. Duties of directors. 167. Vacation of office of director.

168. Resignation of director.

169. Removal of directors.

170. Register of directors and key managerial personnel and their shareholding.

171. Members' right to inspect. 172. Punishment.

Companies Appointment and Qualification of Directors) Rules, 2014

Chapter XII (173-195)

MEETINGS OF BOARD AND ITS POWERS

173. Meetings of Board.

174. Quorum for meetings of Board.

175. Passing of resolution by circulation.

176. Defects in appointment of directors not to invalidate actions taken.

177. Audit committee. 178. Nomination and remuneration committee and stakeholders relationship committee.

179. Powers of Board.

180. Restrictions on powers of Board.

181. Company to contribute to bona fide and charitable funds, etc.

182. Prohibitions and restrictions regarding political contributions.

183. Power of Board and other persons to make contributions to national defence fund, etc. 184. Disclosure of interest by director.

185. Loan to directors, etc.

186. Loan and investment by company.

187. Investments of company to be held in its own name.

188. Related party transactions. 189. Register of contracts or arrangements in which directors are interested.

190. Contract of employment with managing or whole-time directors.


191. Payment to director for loss of office, etc., in connection with

transfer of undertaking, property or shares.

192. Restriction on non-cash transactions involving directors. 193. Contract by One Person Company.

194. Prohibition on forward dealings in securities of company by

director or key managerial personnel.

195. Prohibition on insider trading of securities.

Companies (Meetings of Board and its Powers) Rules, 2014

Chapter XIII(196-205)

APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL

196. Appointment of managing director, whole-time director or manager. 197. Overall maximum managerial remuneration and managerial remuneration in case of absence or

inadequacy of profits.

198. Calculation of profits.

199. Recovery of remuneration in certain cases.

200. Central Government or company to fix limit with regard to remuneration. 201. Forms of, and procedure in relation to, certain applications.

202. Compensation for loss of office of managing or whole-time director or manager.

203. Appointment of key managerial personnel.

204. Secretarial audit for bigger companies.

205. Functions of company secretary.

Companies (Appointment and Remuneration of Managerial

Personnel) Rules, 2014

Chapter XIV (206-229)

INSPECTION, INQUIRY AND INVESTIGATION

206. Power to call for information, inspect books and conduct inquiries.

207. Conduct of inspection and inquiry.

208. Report on inspection made.

209. Search and seizure.

210. Investigation into affairs of company.

211. Establishment of Serious Fraud Investigation Office. 212. Investigation into affairs of company by Serious Fraud Investigation Office.

213. Investigation into company's affairs in other cases.

214. Security for payment of costs and expenses of investigation.

215. Firm, body corporate or association not to be appointed as inspector.

216. Investigation of ownership of company. 217. Procedure, powers, etc., of inspectors.

218. Protection of employees during investigation.

219. Power of inspector to conduct investigation into affairs of related companies, etc.

220. Seizure of documents by inspector.

221. Freezing of assets of company on inquiry and investigation.

222. Imposition of restrictions upon securities. 223. Inspector's report.

224. Actions to be taken in pursuance of inspector's report.

225. Expenses of investigation. 226. Voluntary winding up of company, etc., not to stop investigation proceedings.

227. Legal advisers and bankers not to disclose certain information.

228. Investigation, etc., of foreign companies.

229. Penalty for furnishing false statement, mutilation, destruction of documents.

Companies (Inspection, Investigation and Inquiry) Rules, 2014

Chapter XV (230-240)

COMPROMISES, ARRANGEMENTS AND AMALGAMATIONS

230. Power to compromise or make arrangements with creditors and members. 231. Power of Tribunal to enforce compromise or arrangement.

232. Merger and amalgamation of companies.

233. Merger or amalgamation of certain companies.

234. Merger or amalgamation of company with foreign company.


235. Power to acquire shares of shareholders dissenting from scheme or contract approved by majority.

236. Purchase of minority shareholding.

237. Power of Central Government to provide for amalgamation of companies in public interest. 238. Registration of offer of schemes involving transfer of shares.

239. Preservation of books and papers of amalgamated companies.

240. Liability of officers in respect of offences committed prior to merger, amalgamation, etc.

Chapter XVI (241-246)

PREVENTION OF OPPRESSION AND MISMANAGEMENT

241. Application to Tribunal for relief in cases of oppression, etc.

242. Powers of Tribunal.

243. Consequence of termination or modification of certain agreements.

244. Right to apply under section 241. 245. Class action.

246. Application of certain provisions to proceedings under section

241 or section 245.

Chapter XVII(247)

REGISTERED VALUERS

247. Valuation by Registered Valuers.

Chapter XVIII (248-252)

REMOVAL OF NAMES OF COMPANIES FROM THE REGISTER OF COMPANIES

248. Power of Registrar to remove name of company from registerof Companies.

249. Restrictions on making application under section 248 in certain situations.

250. Effect of company notified as dissolved.

251. Fraudulent application for removal of name.

252. Appeal to Tribunal.

Chapter XIX (253-269)

REVIVAL AND REHABILITATION OF SICK COMPANIES

253. Determination of sickness.

254. Application for revival and rehabilitation.

255. Exclusion of certain time in computing period of limitation.

256. Appointment of interim administrator. 257. Committee of creditors.

258. Order of Tribunal.

259. Appointment of administrator.

260. Powers and duties of company administrator.

261. Scheme of revival and rehabilitation.

262. Sanction of scheme. 263. Scheme to be binding.

264. Implementation of scheme.

265. Winding up of company on report of company administrator.

266. Power of Tribunal to assess damages against delinquent directors, etc.

267. Punishment for certain offences. 268. Bar of jurisdiction.

269. Rehabilitation and Insolvency Fund.

Chapter XX (270-365)

WINDING UP

270. Modes of winding up.

PART I.— Winding up by the Tribunal

271. Circumstances in which company may be wound up by Tribunal. 272. Petition for winding up.

273. Powers of Tribunal.


274. Directions for filing statement of affairs.

275. Company Liquidators and their appointments.

276. Removal and replacement of liquidator. 277. Intimation to Company Liquidator, provisional liquidator and Registrar.

278. Effect of winding up order.

279. Stay of suits, etc., on winding up order.

280. Jurisdiction of Tribunal.

281. Submission of report by Company Liquidator.

282. Directions of Tribunal on report of Company Liquidator. 283. Custody of company's properties.

284. Promoters, directors, etc., to co-operate with Company Liquidator.

285. Settlement of list of contributories and application of assets.

286. Obligations of directors and managers.

287. Advisory Committee. 288. Submission of periodical reports to Tribunal

289. Power of Tribunal on application for stay of winding up.

290. Powers and duties of Company Liquidator.

291. Provision for professional assistance to Company Liquidator. 292. Exercise and control of Company Liquidator's powers.

293. Books to be kept by Company Liquidator.

294. Audit of Company Liquidator's accounts.

295. Payment of debts by contributory and extent of set-off.

296. Power of Tribunal to make calls.

297. Adjustment of rights of contributories. 298. Power to order costs.

299. Power to summon persons suspected of having property of company, etc.

300. Power to order examination of promoters, directors, etc.

301. Arrest of person trying to leave India or abscond.

302. Dissolution of company by Tribunal. 303. Appeals from orders made before commencement of Act.

PART II.—Voluntary winding up

304. Circumstances in which company may be wound up voluntarily.

305. Declaration of solvency in case of proposal to wind up voluntarily.

306. Meeting of creditors. 307. Publication of resolution to wind up voluntarily.

308. Commencement of voluntary winding up.

309. Effect of voluntary winding up.

310. Appointment of Company Liquidator.

311. Power to remove and fill vacancy of Company Liquidator. 312. Notice of appointment of Company Liquidator to be given to Registrar.

313. Cesser of Board's powers on appointment of Company Liquidator.

314. Powers and duties of Company Liquidator in voluntary winding up.

315. Appointment of committees.

316. Company Liquidator to submit report on progress of winding up.

317. Report of Company Liquidator to Tribunal for examination of persons. 318. Final meeting and dissolution of company.

319. Power of Company Liquidator to accept shares, etc., asconsideration for sale of property of company.

320. Distribution of property of company.

321. Arrangement when binding on company and creditors.

322. Power to apply to Tribunal to have questions determined, etc. 323. Costs of voluntary winding up.

PART III.—Provisions applicable to every mode of winding up

324. Debts of all descriptions to be admitted to proof. 325. Application of insolvency rules in winding up of insolvent companies.

326. Overriding preferential payments.

327. Preferential payments.

328. Fraudulent preference.

329. Transfers not in good faith to be void. 330. Certain transfers to be void.

331. Liabilities and rights of certain persons fraudulently preferred.

332. Effect of floating charge.

333. Disclaimer of onerous property.


334. Transfers, etc., after commencement of winding up to be void.

335. Certain attachments, executions, etc., in winding up by Tribunal to be void.

336. Offences by officers of companies in liquidation. 337. Penalty for frauds by officers.

338. Liability where proper accounts not kept.

339. Liability for fraudulent conduct of business.

340. Power of Tribunal to assess damages against delinquent directors, etc.

341. Liability under sections 339 and 340 to extend to partners or directors in firms or companies.

342. Prosecution of delinquent officers and members of company. 343. Company Liquidator to exercise certain powers subject to sanction.

344. Statement that company is in liquidation.

345. Books and papers of company to be evidence.

346. Inspection of books and papers by creditors and contributories.

347. Disposal of books and papers of company. 348. Information as to pending liquidations.

349. Official Liquidator to make payments into public account India.

350. Company Liquidator to deposit monies into scheduled bank.

351. Liquidator not to deposit monies into private banking account.

352. Company Liquidation Dividend and Undistributed Assets Account.

353. Liquidator to make returns, etc. 354. Meetings to ascertain wishes of creditors or contributories.

355. Court, Tribunal or person, etc., before whom affidavit may be sworn.

356. Powers of Tribunal to declare dissolution of company void.

357. Commencement of winding up by Tribunal.

358. Exclusion of certain time in computing period of limitation.

PART IV.—Official liquidators

359. Appointment of Official Liquidator.

360. Powers and functions of Official Liquidator.

361. Summary procedure for liquidation.

362. Sale of assets and recovery of debts due to company.

363. Settlement of claims of creditors by Official Liquidator.

364. Appeal by creditor. 365. Order of dissolution of company.

Chapter XXI (366-378)

PART I.—Companies authorized to register under this Act

366. Companies capable of being registered. 367. Certificate of registration of existing companies.

368. Vesting of property on registration.

369. Saving of existing liabilities.

370. Continuation of pending legal proceedings.

371. Effect of registration under this Part.

372. Power of Court to stay or restrain proceedings. 373. Suits stayed on winding up order.

374. Obligation of Companies registering under this Part.

PART II.—Winding up of unregistered companies

375. Winding up of unregistered companies. 376. Power to wind up foreign companies although dissolved.

377. Provisions of Chapter cumulative.

378. Saving and construction of enactments conferring power towind up partnership firm, association or

company, etc., incertain cases.

Companies (Authorized to Registered) Rules, 2014

Chapter XXII (379-393)

COMPANIES INCORPORATED OUTSIDE INDIA

379. Application of Act to foreign companies. 380. Documents, etc., to be delivered to Registrar by foreign companies.

381. Accounts of foreign company.

382. Display of name, etc., of foreign company.

383. Service on foreign company.


384. Debentures, annual return, registration of charges, books of account and their inspection.

385. Fee for registration of documents.

386. Interpretation. 387. Dating of prospectus and particulars to be contained therein.

388. Provisions as to expert's consent and allotment.

389. Registration of prospectus.

390. Offer of Indian Depository Receipts.

391. Application of sections 34 to 36 and Chapter XX.


393. Company's failure to comply with provisions of this Chapter nottoaffect validity of contracts, etc.

Companies (Registration of Foreign Companies) Rules, 2014

Chapter XXIII(394-395) GOVERNMENT COMPANIES

394. Annual reports on Government companies.

395. Annual reports where one or more State Governments are members of companies.

Chapter XXIV (396-404)

REGISTRATION OFFICES AND FEES

396. Registration offices.

397. Admissibility of certain documents as evidence.

398. Provisions relating to filing of applications, documents, inspection, etc., in electronic form. 399. Inspection, production and evidence of documents kept by Registrar.

400. Electronic form to be exclusive, alternative or in addition to physical form.

401. Provision of value added services through electronic form.

402. Application of provisions of Information Technology Act, 2000.

403. Fee for filing, etc. 404. Fees, etc., to be credited into public account.

Companies (Registration Offices and Fees) Rules, 2014 (amendments incorporated)

Chapter XXV(405)

COMPANIES TO FURNISH INFORMATION OR STATISTICS

405. Power of Central Government to direct companies to furnish information or statistics.

Chapter XXVI

(406)NIDHIS

406. Power to modify Act in its application to Nidhis.

Nidhi Rules, 2014

Chapter XXVII(407-434)

NATIONAL COMPANY LAW TRIBUNAL AND APPELLATETRIBUNAL

407. Definitions.

408. Constitution of National Company Law Tribunal. 409. Qualification of President and Members of Tribunal.

410. Constitution of Appellate Tribunal.

411. Qualifications of Chairperson and members of Appellate Tribunal.

412. Selection of Members of Tribunal and Appellate Tribunal.

413. Term of office of President, Chairperson and other Members. 414. Salary, allowances and other terms and conditions of service of Members.

415. Acting President and Chairperson of Tribunal or Appellate Tribunal.

416. Resignation of Members.

417. Removal of Members.

418. Staff of Tribunal and Appellate Tribunal.

419. Benches of Tribunal. 420. Orders of Tribunal.

421. Appeal from Orders of Tribunal.

422. Expeditious disposal by Tribunal and Appellate Tribunal.

423. Appeal to Supreme Court.

424. Procedure before Tribunal and Appellate Tribunal. 425. Power to punish for contempt.

426. Delegation of powers.


427. President, Members, officers, etc., to be public servants.

428. Protection of action taken in good faith.

429. Power to seek assistance of Chief Metropolitan Magistrate, etc. 430. Civil court not to have jurisdiction.

431. Vacancy in Tribunal or Appellate Tribunal not to invalidate acts or proceedings.

432. Right to legal representation.

433. Limitation.

434. Transfer of certain pending proceedings.

Chapter XXVIII(435-446)

SPECIAL COURTS

435. Establishment of Special Courts.

436. Offences trial by Special Courts. 437. Appeal and revision.

438. Application of Code to proceedings before Special Court.

439. Offences to be non-cognizable.

440. Transitional provisions.

441. Compounding of certain offences.

442. Mediation and conciliation penal. 443. Power of Central Government to appoint company prosecutors.

444. Appeal against acquittal.

445. Compensation for accusation without reasonable cause.

446. Application of fines.

Chapter XXIX (447-470)

MISCELLANEOUS

447. Punishment for fraud.

448. Punishment for false statements.

449. Punishment for false evidence. 450. Punishment where no specific penalty or punishment is provided.

451. Punishment in case of repeated default.

452. Punishment for wrongful withholding of property.

453. Punishment for improper use of "Limited" or "Private Limited".

454. Adjudication of penalties. 455. Dormant company.

456. Protection of action taken in good faith.

457. Non-disclosure of information in certain cases.

458. Delegation by Central Government of its powers and functions. 459. Powers of Central Government or Tribunal to accord approval, etc., subject to conditions and to

prescribe fees onapplications.

460. Condonation of delay in certain cases.

461. Annual report by Central Government.

462. Power to exempt class or classes of companies from provisions of this Act.

463. Power of court to grant relief in certain cases. 464. Prohibition of association or partnership of persons exceeding certain number.

465. Repeal of certain enactments and savings.

466. Dissolution of Company Law Board and consequential provisions.

467. Power of Central Government to amend Schedules.

468. Powers of Central Government to make rules relating to winding up. 469. Power of Central Government to make rules.

470. Power to remove difficulties.


LAW DICTIONARY

Ipso Facto In fact

Ab Initio From the Beginning

Bona Fide In Good Faith

Estoppel Stopped from denying

Inter Alia Among other things

Intra Vires Within the powers

Ultra Vires Beyond the powers

Mala Fide In bad faith

Mens Rea Guilty Mind

PariPassu On equal footing or Proportionately

Prima Facie At first sight or on the face of it

Pro rata In proportion

Supra Above

Sine qua non Indispensable condition or very important


UNIT1: INTRODUCTION

MEANING OF COMPANY

The word ―Corporation‖ is derived from the Latin Word ―Corpus‖ which means ―Body‖. Accordingly, Corporation is a legal person created by a process other than Natural Birth. As a legal person, a corporate is capable of enjoying many of the

rights and incurring many of the liabilities of a natural person.

DEFINITION OF COMPANY

The term ‗company‘ has been defined under Section 2(20) of the Companies Act, 2013. As per this, ‗company‘ means a company incorporated under Companies Act, 2013 or under any of the previous laws relating to companies.

CHARACTERISTICS OF COMPANY

SEPARATE LEGAL ENTITY

A Company has a corporate personality, so its bears its own Name, Acts

under Separate Name, has a Seal of its own and its Assets are separate and distinct from those of its members. Therefore, it is capable of owning property, incurring debts, borrowing money, having a bank account, employing people, entering into contracts and suing or being sued in the same manner as an Individual. Its members are its owners however; they can be its creditors simultaneously. A Shareholder cannot be held liable for the acts of the company even if he holds virtually the entire share capital. The shareholders are not the agents of the company so they cannot bind it by their acts. Thus, Incorporation is the act of forming a legal corporation as a Juristic Person. A Juristic Person is in law also conferred with rights and obligations and is dealt with in accordance with law. [Shiromani Gurdwara

Prabandhak Committee vs. Shri Sam Nath Dass]

The Case of Salomon Vs. Salomon & Co. Ltd

The above case has clearly established the principle of separate legal entity. Salomon has, for some years, carried on a prosperous business as a leather merchant and boot manufacturer. He formed a limited company consisting of himself, his wife and a daughter, and his four sons as the shareholders, all of whom subscribed for one share of 1 pound each. Salomon was the managing director and two of his sons where other directors.

Salomon sold his business (which was perfectly solvent at that time) to the Company for the sum of 38,782 pounds. He got the following payments :-

10,000 Secured Debentures of 1 pound each 10,000 pounds

20,000 Fully – paid Shares of 1 pound each 20,000 pounds

Cash 8,782 pounds

The company soon ran into difficulties and the debenture holders appointed a receiver and the company went into liquidation. The total assets of the company amounted to 6,050 pounds, its liabilities were 10,000 pounds secured debentures and 8,000 pounds owing to unsecured trade creditors. The unsecured trade creditors claimed the whole of the company‘s assets, viz. 6,050 pounds on the ground that as the company was a mere agent for Salomon and thus they were entitled to payment of their debts in priority to debentures. The House of Lords rejected these contentions and held that a company, on registration, has its own existence or personality separate and distinct from its members and, as a result, a shareholder cannot be equated with a company, even if he holds virtually the entire share capital of the company.


Comment on the Following: 1. ―A Shareholder is held personally liable for the acts of the company, if he

holds virtually the entire Share Capital of the Company.‖ (Dec 2013) 2. ―A Shareholder who holds 99% of the Share Capital of the Company can

be held liable for the acts of the company.‖ (June 2012)

New Horizons Ltd. v. Union of India

is the legendary case in regard to whether experience of a shareholder can be regarded as experience of a company. In general, the experience of a shareholder cannot be regarded as experience of a company. However, in the case, of joint venture companies the experience of the company can only mean the experience of the constituent of the joint venture. This is so because a joint venture company is in the nature of a partnership between the two or more constituent companies and each constituent company undertakes to contribute towards the resources of joint venture company in the form of machines, equipment, expertise, etc.

LIMITED LIABILITY

A company limited by shares is a registered company having the liability of its members limited to the amount if any, unpaid on the shares respectively held by them. If his shares are fully paid – up, he has nothing more to pay. However, there are exceptions to their general rule where liability of company is treated as Unlimited. (these situations are covered under respective topics)

PERPETUAL SUCCESSION

An incorporated company never dies. Perpetual succession, therefore, means that the membership of a company may keep changing from time to time but does not affect its continuity. Members may come and members may go but the company can go forever. The company will remain the same entity, despite total change in the membership. Thus, perpetual succession denotes the ability of a company to maintain its existence by the constant succession of new individuals who step into the shoes of those who cease to be members of the company. Comment on the Following: 1. ―A company incorporated under Companies Act, 2013 never dies, except

when it is wound up as per the Law.‖ (Dec 2015)

SEPARATE PROPERTY

No member can claim himself to be the owner of the company‘s properties either during its existence or in it winding up. A member does not even have an insurable interest in the property of the company. A person, for example, for the holder of nearly all the shares except one of a timber company and he was also a substantial creditor, he insured the company‘s timber in his own name. The timber having been destroyed by fire, the insurance company was held not liable to him. [Macaura v. Northern Assurance Company

Ltd.] Shareholders are not in the eye of the law, part owners of the undertaking. The undertaking is something different from the totality of shareholders. [Short v. Treasury Commissioners]

TRANSFERABILITY OF SHARES

The capital of a company is divided into parts called shares. The shares are said to be movable property and subject to certain conditions, freely


transferable for that. No shareholder is permanently or necessarily wedded to a company. It may be noted that this right of shareholder is restricted in the case of a private company. Section 44 of the Companies Act, 2013 provides that the shares held by members are movable property and can be transferred from one person to another in the manner provided by the articles of association of a company. If the articles do not provide anything for the transfer of shares and the regulations contained in Table F are also expressly excluded, the transfer of shares will be governed by the general law relating to transfer of movable property.

COMMON SEAL

Since a company has no physical existence, it must act through its agents. All the important documents of a company must be under the common seal if any of the company. The common seal, thus, acts as the official signature

of a company. As per Companies Act, 2013, only certain important documents such as share certificate and authorization to any person to act as attorney of the company for the purpose of execution of any deeds on behalf of the company shall be issued under the common seal, if any, of the company. Apart from this, articles of a company may also require for certain other documents to be under the common seal. Thus, all documents need not be under the common seal of a company.

It may be noted that Companies (Amendment) Act, 2015 had made it optional for the companies to have the common seal. The Board shall provide for the safe custody of the seal. The seal of the company shall not be affixed to any instrument except by the authority of a resolution of the Board or of a committee of the Board authorised by it in that behalf, and except in the presence of at least two directors and of the secretary or such other person as the Board may appoint for the purpose; and those two directors and the secretary or other person aforesaid shall sign every instrument to which the seal of the company is so affixed in their presence. Comment on the following: 1. ―Common Seal of a company will have to be affixed on all the letters and

documents of the company‖ Discuss (Dec 2009) 2. ―Common Scan be used by any employee of the company irrespective of

his designation.‖ (June 2014) 3. ―Common Seal acts the official signature of the company.‖ (Dec 2013)

CAPACITY TO SUE AND BE SUED

A company, being a body corporate, can sue and be sued in its own name. To sue, means to institute legal proceedings against a person or to bring a suit in a court of law. All legal proceedings against the company are to be instituted in its name. Similarly, a company may bring an action against anyone in its own name. A company‘s right to sue arises when some loss is caused to the company i.e. to the property or the personality of the company. A company, as a person distinct from its members, may even sue on one of its own members. [Floating Services Ltd vs. MV San Fransceco Dipaloa] Comment on the Following: 1. ―A Company incorporated under Companies Act, 2013 being an artificial

person, is not entitled to sue a natural person or to sue another company incorporated under the same act.‖ (Dec 2015)


CONTRACTUAL RIGHTS

A company, being a legal entity different from its members, can enter into contracts for the conduct of the business in its own name. A member of a company cannot sue in respect of torts committed against it, nor can he be sued for torts committed by the company. [British Thomson-Houston Company

v. Sterling Accessories Ltd.]

LIMITATION OF ACTION

A company cannot go beyond the powers of its Charter – the Memorandum of Association. The action and objects of the company are limited within the scope of its memorandum of association. However, it can amend the MOA itself prior to doing any act not contained in it.

SEPARATE MANAGEMENT

The members of a company may derive profits without being burdened with the management of the company. The company is administered and managed by its own managerial personnel.

VOLUNTARY ASSOCIATION FOR PROFIT

A company is a voluntary association for profit. It is formed for the accomplishment of some public goals and whatsoever profit is gained is divided among its shareholders.

TERMINATION OF EXISTENCE

It has the existence only in contemplation of law. It is created by law, carries on its affairs according to law throughout its life and ultimately is effaced by law. Generally, existence of a company is terminated by means of winding up.

IS COMPANY A CITIZEN?

Although, a company is regarded as a legal person (though artificial), it is not a citizen either under the Constitution of India or the Citizenship Act, 1955. This is also the conclusion of the special bench of the Supreme Court in STC. v. Commercial Tax Officer.

One of the contentions put forth on behalf of STC was that if the corporate veil is pierced, one sees three persons who are admittedly the citizens of India and therefore the corporation should also be regarded as a citizen. But it was held that neither the provisions of the Constitution of India nor the Citizenship Act, 1955, either confer the right of citizenship on or recognize as citizen any person other than a natural person. In the words of Justice Hidayatullah:―If all of them (the members) are citizens of India, the company does not become a citizen of India, any more than, if all are married, the company would be a married person.‖

However, where shareholder rights are equally affected if the rights of the company are affected, it can claim the protection of all such rights, which are guaranteed to citizens through shareholders or directors of the company. [R. C. Cooper v. Union of India]

HAS COMPANY A NATIONALITY AND RESIDENCE?

It is established through judicial decisions that a company cannot be a citizen, yet it has nationality, domicile and residence.

A joint stock company resides where its place of incorporation is, where the meetings of the whole company or those who represent it are held and where its governing body meets in bodily presence for the purposes of the company and exercises the powers conferred upon it by statue and by the articles of the association. [Tulika v. Parry & Co.]

Residence is an important connecting factor between a company and the governing legal system. It is on this basis that a liability of a company to pay income-tax is determined. Though the place of incorporation is


considered as the primary evidence of a company, it is by no means the conclusive test. So, an alternative test is applied to bring a company within the purview of a legal system in which it operates business and earns a fabulous income.

LIFTING OF CORPORATE VEIL (December 2015)

When the corporate entity is being abused for an unjust and inequitable purpose, the Courts have lifted the veil of corporate personality and looked into the realities and have held the persons behind the company, guilty and liable. Where the Courts have done it, the doctrine has been described as the doctrine of the ―lifting of corporate veil‖.

Statutory Recognition of Lifting Of Corporate Veil The Companies Act, 2013 itself contains some provisions [Section 7(7), 251(1) and 339] which lift the corporate veil to reach the real forces of action. Section 7(7) deals with punishment for incorporation of company by furnishing false information; Section 251(1) deals with liability for making fraudulent application for removal of name of company from the register of companies and Section 339 deals with liability for fraudulent conduct of business during the course of winding up.


LIFTING OF CORPORATE VEIL UNDER JUDICIAL INTERPRETATION

FRAUD Fraud vitiates everything. In Gilford Motor Co. v. Horne, a former employee of a company covenanted not to solicit its customers. He formed a company to carry on his business and it undertook the solicitation. An injunction was granted against him and the company to restrain them. In another case, Jones v. Lipman, Lipman agreed to sell certain land to Jones. Pending completion of formalities of the said deal, Lipman sold and transferred the land to a company, which he had incorporated with a nominal capital of 100 pounds and of which he and a clerk were the only shareholders and directors. This was done in order to escape a decree for specific performance in a suit brought by Jones. The Court asked the company to transfer its land to Jones.

PUBLIC POLICY Where there is a conflict with the public policy, the courts will pay regard to the substance and ignore the form. The courts will invariably lift the corporate veil for the purpose of protecting the public policy and prevent transactions contrary to public policy. [Conors Bros. v. Conors]

FOR DETERMINING RESIDENCE AND CHARACTER

The Courts also look behind the façade of the company and its place of registration in order to determine its residence for the purposes of taxation or the character of the company, for example whether it is enemy. [Daimler Co.

Ltd. v. Continental Tyre& Rubber Co.] Comment on the following: A company can be regarded as having enemy character under certain circumstances. (June 2011)

IN THE INTEREST OF REVENUE

The Court has a power to disregard corporate entity if it is used for tax evasion or to circumvent tax obligations. [CIT v. Meenakshi Mills Ltd.]

FORMATION OF COMPANIES TO DIVIDE INCOME AND AVOID TAX

Where it was found that the sole purpose for which the company was formed was to evade taxes, the Court will ignore the concept of separate entity and make the individuals liable to pay the taxes which they would have paid but for the formation of the company. [Re. Sir DinshavManakjee Petit]

AVOIDANCE OF WELFARE LEGISLATION

Where it was found that the sole purpose for the formation of the new

company was to use it as a device to reduce the amount of bonus to be paid to workmen, the Supreme Court upheld the piercing of the veil to look at the real transaction. [The Workmen Employed in Associated Rubber Industries Limited v.

Associated Rubber Industries Limited]

It will thus be noticed that as a result of statutory provisions and judicial pronouncements, the Salomon‘s Case no longer holds good. In appropriate cases, the courts disregard the corporate entity and look behind the legal person.

BODY CORPORATE OR CORPORATION:

‗Body Corporate‘ or ‗Corporation‘, includes a company incorporated outside India, but does not include the following: (a) A co-operative society registered under any law relating to co-operative societies; and


(b) Any other body corporate, not being a company, which the Central Government may, by notification in the Official Gazette, specify in this behalf. [Section 2(11)]

A society registered under the Societies Registration Act, 1860 has been held by the Supreme Court not to come within the term ‗body corporate‘ under the Companies Act. [Board of Trustees v.

State of Delhi].

Thus, the term body corporate, being an inclusive definition, includes not only companies within

the meaning of Companies Act, 2013 and corporations established under Special Acts of Parliament but also foreign companies. It will further include all public financial institutions as well as nationalized banks. Thus, the term ‗body corporate‘ is wider than the expression company.

ILLEGAL ASSOCIATION:

Section 464 of the Companies Act provides that not more than 100 persons can combine together

for carrying on any business, the object of which is acquisition of gain, unless the association is registered under the Companies Act or is formed under any other Indian Law. An association formed in contravention of Section 464 will be regarded as an illegal association. The sole test to determine an illegal association is whether it carries on business for the purpose of gain. Associations like charitable, religious or scientific, which are not formed for the purpose of gain, are excluded from the scope of this section. This section does not apply to a Joint Hindu Undivided Family business but where two or more such joint families form partnership, they will come within the scope of this section but in counting the number of persons, the minor members of such families will be excluded. The Karta‘s of two HUFs formed a partnership to carry on business for the acquisition of gain. Each of the families consisted more than 25 adult members. Is this partnership a legal one? Yes. The partnership is legal as it consists of only two partners. When the Karta of HUF enters with outsiders in business, the other members of such family do not ipso facto become partners but only such of the members as in fact enter into a contracting relation with the outsiders. [Re.

Gangayya v. Venkataramiah]

EFFECTS OF NON-REGISTRATION OF AN ASSOCIATION

The effect of non-registration of an association is that such association is illegal and has no existence in the eyes of law. The law does not recognize it so much so no relief can be granted either to the association or to any of its members, as the contractual relationship on which it is founded is illegal. [Badri Prasad v. Nagarmal]

The law does not recognize illegal association and therefore it cannot be wound up by order of court. In fact, the Court cannot entertain a petition for its winding up of a company formed in contravention of the provision of Section 464. The winding up of unregistered companies though lawfully formed cannot be done under the provisions of this Act. [RaghubarDayalv.TheSarafa

Chamber and others].

Every member of an illegal association is : (a) Personally liable for all liabilities incurred in carrying on the business of, or by, the illegal association; and (b) Punishable with fine up to Rs.1,00,000/-.

INCONSISTENCY OR CONTRADICTION OR CONFLICT BETWEEN SECTION 464 OF THE COMPANIES ACT, 2013 AND SECTION 69 OF THE INDIAN PARTNERSHIP ACT, 1932

(Not Relevant from Exam point of view)

Section 464(1) of the Companies Act, 2013 declares implicitly an association illegal, if it carries on business for profit with members exceeding fifty and is not registered. Therefore, no claim by one member against another member of an illegal association is tenable under this section.

However, Rules has prescribed 50

Persons


But Section 69(3)(a) of the Indian Partnership Act, 1932 provides for maintainability of an action by one partner against another when the firm is not registered under that Act. That action may relate to dissolution of a firm or accounts of a dissolved firm. This concession is granted because under that Act an unregistered firm is not illegal. There is no direct compulsion that a partnership firm must be registered. Thus, there is an inconsistency or contradiction or conflict between Section 464 of the Companies Act, 2013 and Section 69 of Indian Partnership Act, 1932. There is a principle of law that whenever there is an inconsistency or contradiction or conflict between two provisions of law, out of which one is specific in nature and another is general in nature, the specific law will prevail over the general law. In the present case, Section 69 of Indian Partnership Act, 1932 is a specific law and Section 464 of the Companies Act, 2013 is a general law for a partnership firm. Hence, here Section 69 of Indian Partnership Act, 1932 will prevail over Section 464 of the Companies Act, 2013.

INTRODUCTION OF COMPANIES ACT, 2013

Companies Bill, 2012 was passed by the LokSabha on 18th December, 2012 and by the RajyaSabha on 8th August, 2013. On receiving the assent of the Hon‘ble President of India on August 29, 2013, it was notified on August 30,2013 as the Companies Act, 2013.

It may be noted that only Section 1 of the Companies Act, 2013 came into force with effect from 30th August, 2013. As far as the remaining provisions of this Act is concerned, they shall come into force on such date as the Central Government (Ministry of Corporate Affairs) may, by notification in the Official Gazette, appoint and different dates may be appointed for bringing into force different provisions of the Companies Act, 2013. For instance, Central Government has made, 98 Sections and part thereof of the Companies Act, 2013, effective from 12th September, 2013. As on 1st April, 2014, 282 Sections, including earlier notified sections, have come into operation out of total 470 Sections. The remaining sections of Companies Act, 2013, mostly pertaining to areas involving the role of National Company Law Tribunal (NCLT), shall come into effect in future, by way of notification, only after the NCLT is constituted. Thus, Companies Act, 2013 is all set to replace the existing 56 year old company law, i. e., Companies Act, 1956, very soon. It moves from the regime of control to that of liberalization or self-regulation.

PURPOSE/OBJECTIVE OF THE ACT

The Act broadly seeks to achieve the following objectives: a. To promote the development of the company by encouraging entrepreneurship and enterprise efficiency and creating flexibility and simplicity in the formation and maintenance of companies; b. To encourage transparency, accountability and high standards of corporate governance; c. To recognize various new concepts and procedures facilitating ease of doing business while protecting interests of all the stakeholders; d. To enforce stricter action against fraud and gross non-compliance with company law provisions; e. To set up institutional structure in the form of various authorities, bodies and panels as well as by including recognition of various roles for professionals and other experts; and f. To cater to the need for more effective and time bound approvals and compliance requirements relevant in the present context.


STRUCTURE OF THE ACT

The Companies Act, 2013 has 470 Sections (covered in 29 Chapters) and 7 Schedules as against 658 Sections (covered in 13 Parts) and 15 Schedules of the Companies Act, 1956. It may be noted that the number of Sections has been drastically reduced, but at the same time the Central Government has been empowered, in number of Sections, to prescribe various aspects in the form of Rules, thereby recognizing the more importance of delegated legislation. It can be said Companies Act, 2013 has been structured on skeleton approach. This has been done for ensuring that the law remains relevant at all times in the changing economic environment.

APPLICABILITY OF THE ACT

Section 1 provides that the Companies Act, 2013 applies on whole of India. Companies Act, 1956 also applies on whole of India. However, proviso to Section 1(3) of the Companies Act, 1956 empowers the Central Government to modify the provisions of the Act, while applying this Act on the State of Nagaland. Similarly, 620B and 620C of the Companies Act, 1956 empowers the Central Government to, modify, or exempt from, the provisions of the Act, while applying this Act on the States of Goa, Daman, Diu and Jammu & Kashmir respectively. These kind of powers of the Central Government has been taken away by the Companies Act, 2013. Thus, the 2013 Act puts an end to the power of the Central Government under the 1956 Act to exempt companies from provisions of Companies Act based on regional considerations.

Highlights Of The Companies Act, 2013

Passed in LokSabha December 18, 2012

Passed in RajyaSabha August 08, 2013

President‘s Assent August 29, 2013

Total Number of Sections 470

Total Number of Chapters 29

Total Number of Schedules 7

Number of Sections Notified (Total 282) Section 1 on August 29, 2013

98 Sections on September 12, 2013

183 Sections on April 01, 2014

Total Number of Rules Notified Rules Under 21 Chapters Notified

ADMINISTRATION OF COMPANY LAW

The Companies Act, 2013 is administered by the Ministry of Corporate Affairs and it has the jurisdiction over the entire country. Further under the Ministry of Corporate Affairs, there are seven Regional Directors, one for each region i. e. north, east, west, south, north-east, north-west and south-east located at Noida, Kolkata, Mumbai, Chennai, Shillong, Ahmadabad and Hyderabad respectively. All the states lying in one particular region come under the jurisdiction of Regional Director of that region. Hence, all the Registrar of Companies (ROC) of all the states falling under one particular region of India act as sub-ordinate to the Regional Director (RD) of that region. In addition to aforesaid structure, National Company Law Tribunal (NCLT) is also one quasi-judicial authority with regard to the Companies Act, 2013. It may be noted that the provisions of NCLT and the all the aspects of Companies Act, 2013 (such as corporate restructuring , winding up, sick companies, etc.) involving the role of NCLT has not come into force till date.


IMPORTANT DEFINTIONS FINANCIAL STATEMENT

―financial statement‖ in relation to a company, includes— (i) a balance sheet as at the end of the financial year; (ii) a profit and loss account, or in the case of a company carrying on any activity not for profit, an income and expenditure account for the financial year; (iii) cash flow statement for the financial year; (iv) a statement of changes in equity, if applicable; and (v) any explanatory note annexed to, or forming part of, any document referred to in sub-clause (i) to sub-clause (iv): Provided that the financial statement, with respect to One Person Company, small company and dormant company, may not include the cash flow statement;

FREE RESERVES ―free reserves‖ means such reserves which, as per the latest audited balance sheet of a company, are available for distribution as dividend: Provided that— (i) any amount representing unrealized gains, notional gains or revaluation of assets, whether shown as a reserve or otherwise, or (ii) any change in carrying amount of an asset or of a liability recognized in equity, including surplus in profit and loss account on measurement of the asset or the liability at fair value, shall not be treated as free reserves;

PUBLIC FINANCIAL INSTITUTION

(June 2016)

―public financial institution‖ means— (i) the Life Insurance Corporation of India, established under section 3 of the Life Insurance Corporation Act, 1956; (ii) the Infrastructure Development Finance Company Limited, referred to in clause (vi) of sub-section (1) of section 4A of the Companies Act, 1956 so repealed under section 465 of this Act; (iii) specified company referred to in the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002; (iv) institutions notified by the Central Government under sub-section (2) of section 4A of the Companies Act, 1956 so repealed under section 465 of this Act; (v) such other institution as may be notified by the Central Government in consultation with the Reserve Bank of India: Provided that no institution shall be so notified unless— (A) it has been established or constituted by or under any Central or State Act; or (B) not less than fifty-one per cent. of the paid-up share capital is held or controlled by the Central Government or by any State Government or Governments or partly by the Central Government and partly by one or more State Governments;

NIDHI COMPANY ―Nidhi‖ means a company which has been incorporated as Nidhi with the object of cultivating the habit of thrift and savings amongst its members, receiving deposits from, and lending to, its members only, for their mutual benefit, and which complies with such rules as are prescribed by the Central Government for regulation of such class of companies.

FOREIGN COMPANY

―foreign company‖ means any company or body corporate incorporated outside India which— (a) has a place of business in India whether by itself or through an agent, physically or through electronic mode; and (b) conducts any business activity in India in any other manner.


NET WORTH ―net worth‖ means the aggregate value of the paid-up share capital and all reserves created out of the profits, securities premium account and debit or

credit balance of Profit or Loss Account, after deducting the aggregate value of

the accumulated losses, deferred expenditure and miscellaneous expenditure not written off, as per the audited balance sheet, but does not include reserves created out of revaluation of assets, write-back of depreciation and amalgamation;

TURNOVER "turnover" means the gross amount of revenue recognized in the profit and loss account from the sale, supply, or distribution of goods or on account of services rendered, or both, by a company during a financial year;'.

Basis Company Partnership

Registration A company cannot come into existence unless it is registered.

In a partnership firm registration is not compulsory.

Minimum no of members

The minimum number in a public company is seven and in case of a private companies two.

Partnership the minimum number of partners is two.

Maximum no of members

The maximum limit of members in case of a private company is fifty but in case of public company there is no maximum limit.

The maximum limit of partners under partnership is 50.

Liability In case of joint stock company the liability of shareholders is limited (except in case of unlimited companies) to the extent of face value of shares or to the extent of guarantee.

In case of partnership the liability of partners is unlimited.

Management The affairs of a company are managed by its directors. Its members have no right to take part in the day to day management

Every partner of a firm has a right to participate in the management of the business unless the partnership deed provides otherwise.

Legal Status A company has a separate legal status

distinct from its shareholders.

A partnership firm has no legal

existence distinct from its partners.

Insolvency/ Death

Insolvency or death of a shareholder does not affect the existence of a company.

A partnership ceases to exist if any partner retires, dies or is declared insolvent.

Governing Law

Companies are governed by Companies Act, 2013

Partnership Firms are governed by Indian Partnership Act, 1932

Basis HUF Company

Registration Not compulsory under any law Compulsory under Company Laws

Membership By virtue of birth By virtue of contract

Authority to

create debt Retains with Karta only Company itself has authority to create debt

through its Directors subject to the provisions if MOA & AOA.

Management Management lies in the hands of Karta

Management lies in the hands of Board of Directors


Liability Karta‘s Liability is unlimited Members liability is limited to the extent of unpaid amount on shares

Governing Law

HUF is governed by Hindu Law Company is governed by Companies Act, 2013

INDEX LIST OF SECTIONS UNDER COMPANIES...

Documents

Transcript of INDEX LIST OF SECTIONS UNDER COMPANIES...