KRISHAN COMMERCE CLASSES

KRISHAN COMMERCE CLASSES

Company law1Minimum numbers of members in a private company2

2.minimum paid up capital in a private company1 lac

3Minimum numbers of members in a public company7

4minimum paid up capital in a public company5 lac

5maximum numbers of members in private company50

6maximum numbers of members in public companyno limit

7If minimum number of members falls below limit Up to 6 M company liable for any debt incurred After that- all members aware of that fact

8Voting rights ( 177 to 185)1. By show of hands one member = one vote Proxy may vote by show of hands if AOA so provides Proxy no right to speak, but to vote2. By poll 1 share 1 vote Proxy no right to speak, but to vote

9notice period (minimum)21 clear days

10Minimum numbers of directors in a public company3

11Minimum numbers of directors in a private company2

12Maximum numbers of directors in a public company12 or mentioned in first registered AOA, whichever is higher

13Minimum numbers of directors in a private companyno limit

14maximum numbers of directorships15

15statutory general meeting Section 165 Only by public co. having share capital Within 6 month from the date of certificate to commence business ,but not earlier than 1 month At least 21 clear days notice Business - special Documents with notice- statutory report + proxy form +admission card At any time + any day + at any place ( law silent ) consequences of default- fine up to Rs. 5000 for every officer in default + Tribunal may also order for compulsory winding up if default in sending SR or in holding SGM Shorter notice with consent of members holding at least 95% PUC/voting power

16AGM Section 166 to 168 By every company Once in every calendar ( but it would be enough to convene in year of Inc and subsequent year, but not thereafter) 1st AGM within 18 M of incorporation & within 9 M of end of FY Subsequent AGM- within 15 months of previous AGM and within 6 M of end of FY( ROC may grant extension up to 3 months) Notice atleast 21 clear days Business- ordinary(4)+special At RO or other place within city, town or village in which RO situated + during business hrs + at any day other than public holiday Documents with notice- explanatory statement + proxy form + admission card Shorter notice- with the consent of all members entitled to vote Consequences of default- fine up to Rs. 50000 & Rs. 2500 Per day for company and every officer in default

17Appointment of sole selling agent without reserving any conditionvoid ab initio

18Maintain index of members when no. of members exceed50

19Maintain index of debenture holders when no. of debenture holders exceed50

20Appointment of auditor u/s 224OR

21Appointment of auditor u/s 224aSR

22Appointment of first auditorwithin 1 month of incorporation by BOD

23Appointment of subsequent auditorsin AGM by shareholders

24If auditor not appointed in agmCG shall appoint

25Dividend is paid on paid up share capital

26Stamp duty is paid on the basis of authorized share capita

27Called up capital calls in arrearspaid up capital

28Interest on calls in arrears as per table-a5% p.a

29Interest on calls in advance as per table-a6%

30Maximum underwriting commission on shares5% of issue price or prescribed in AOA , whichever is lower

31Maximum underwriting commission on debentures2.5% of issue price or prescribed in AOA, whichever is lower

32Payment of dividend within --- numbers days from declaration30

33Declaration of interim dividendby BOD

34Declaration of final dividend by shareholders in AGM

35Number of scrutineers in case of voting u/s 192a1

36Number of scrutineers in case of voting by poll2

37Quorum in case of private company2

38Quorum in case of public company5

39If dividend not claimed with in ---- number of years from date of transfer to unclaimed dividend account, transfer it to ------ a/c7, investor education and protection fund

40A certificate of incorporation is conclusive evidence

41Contracts before incorporation

- pre-incorporation/Preliminary contracts void-ab-initio- become valid if adopted by co.

42Contracts after incorporation but before certificate to commence business provisional contracts valid from the date of certificate to commence business

43Promoter defined under ----- section of companies act,1956not defined

44Dividend out of capital profitspower in AOA + realized CP + left after revaluation of other assets

45Dividend out of capitalnot allowed, if allowed it is reduction of capital

46Interest on capitalCG approval

47Maximum tenure of preference share capital20 years

48Dividendan appropriation of profits

49Interestcharge against profit

50Proceeding of a meeting is recorded in the minutes

51Any business other than ordinary business is calledspecial business

52A company whose name has been struck off from the register of companiesdefunct company

53Authorities under CGMCA+RD+ROC

54Starting of RO within 30 days of incorporation or certificate to commence business, whichever is earlier notice to ROC regarding situation of RO- within 30 days of incorporation

55Change of RO within cityBR +notice to ROC

56Change of RO city to city, but roc changedSR + RD + notice to both ROC

57change of RO from city to city, roc not changedSR + notice to ROC

58change of RO from state to stateSR + CLB + notice to ROC(30 d ) +permission from debenture holders , creditors

59change in nameCG+SR

60cg can raise objection on name within ____ year of incorporation 1

61reduction in capitalSR + Court

62buyback up to 10% of paid up capital +reservesBR

63buyback for more than 10% of paid up capital + ReservesSR

64ORsimple majority

65SR3 times majority

66business to be transacted in the meetingagenda

67presiding officer of the meetingchairman

68securities bought back should be extinguished within 7 days of completion of bb

69bb must be completed with in 12 months

70maximum premium on issue of sharesno limit

71maximum discount on issue of shares10% + CG+ issue within 2 months of approval + atleast after 1 year from certificate to commence business

72change in AOASR u/s 31

73act beyond power ultra vires

74Acts beyond MOAvoid ab initio

75act beyond directors but within moacan be ratified

76change in object clauseSR

77ORsimple majority

78SR3 times majority

79maximum limit u/s 372a60%(FR+PUC) or 100% x FR, whichever is higher

80up to above limitunanimous BR

81if above limit exceededSR

82audit committee compulsory u/s 292a if PUC>5 crore co.- public

83appointment of SSD compulsory, if co.- public PUC>5 crore no. of SS- > 1000 SS having shares of NV of 2/3 of total strength

85retiring directors>1/3 of above

86qualification shares

if AOA requires max value< Rs. 5000 if single share > Rs. 5000, then hold only 1 share Tenure- within 2 m of appointment if not allotted within 2 M - vacate office u/s 272 & u/s 283

87appointment of additional directors by

BOD( by BR or circular resolution) powers in AOA term- till the ensuing AGM

88filling casual vacancy By BOD (only Resolution in BM) irrespective of powers given in AOA tenure- till the term of dir in whose place he is appointed

89appointment of government auditorBy C and AG of India

90a company promoting art, science, commerce, social welfare S- 25 co. or licensed co. license from cg may or may not have sc may or may not end the name with pvt ltd or ltd cg may revoke license, if T&C violated

91an alternate director is appointed by BOD (BR or circular resolution) powers in AOA absence of original dir from state > 3 months tenure- till original dir returns to state or original dirs term expires

92appointment of more than 1 dir by single resolution pass unanimous res. then appoint

93holding of office or place of profit by director when getting any remuneration over & above the remuneration to which he is entitled as a director

94314(1A)- Dir without following covered if their total monthly remuneration is 50000 or more,A. relative of a directorB. firm in which director is a partnerC. Pvt. Co. in which director is a director or member.either holding company or its subsidiary company

SR

95314(1B) following covered if their total monthly remuneration is 250000 or more,A. relative of a director or managerB. firm in which director is a partnerC. Pvt. Co. in which director or relative is a director or member.notes: 1. holding and subsidiary not covered2. directors excluded3. form for obtaining cg approval e-form 24b

CG+SR(both previous approval)

96loan to director CG

97maximum remuneration under section 19811% of NP

98removal of director u/s 284SN + or in GM

99special noticeat least 14 days before GM

100ordinary businessDividend declaration + books of a/c +auditor(app)+Dir (app)

101special business shall always requires SRfalse, (e.g.- section 224a)

102disqualification u/s 274(1)(g)

103while excluding total strength u/s 255, directors to be excluded nominee director director u/s 408 dir appointed by BIFR

104disqualification u/s 274 found to be of unsound mind an undischarged insolvent applied to be adjudicated as insolvent court order u/s 203 convicted in offence involving moral turpitude and imprisonment for more than 6 m & 5 y not elapsed from such conviction call money due for more than 6 months

105vacation of office u/s 283 found to be of unsound mind applied to be adjudicated as insolvent court order u/s 203 convicted in offence involving moral turpitude and imprisonment for more than 6 months call money due for more than 6 month not attended 3 consecutive board meeting or for 3 months without leave failure to acquire qualification shares within 2 m of appointment removal u/s 284 default u/s 295 no disclosure u/s 299

106an MD must be a director firstyes

107a manager must be a director firstno

108a person holding substantial powers of companyMD

109a person holding whole or substantially whole powersmanager

110objectives of buy back increase in EPS increase in promoter shareholding to prevent hostile takeover to achieve optimum capital structure to return surplus cash to shareholders to support share price during sluggish market to provide an additional exit route to shareholders

111sources of BBFree reserves + security premium + proceeds of new issue

112.prohibition of BB

through subsidiary Through investment co. when default in deposit or loan or its interest, dividend, redemption of PS/debt non-compliance u/s 159(AR),207,211(AA)

113. Modes of BB

from odd lots from employees from existing SH on proportionate basis from open MKT

114proxy deposit of proxy instrument with co. - 48 hrs before the time for holding meeting or shorter period as per AOA right to vote, but not to speak unless AOA so provides

115Recording of minutesWithin 30 days of conclusion of meeting

116Filing of prescribed documents by a foreign companyWith 30 days from date of establishment in India

117 +118maximum numbers of partners in a firm in a banking firm - 10 other than banking firm - 20 if above limits exceed create company if not created becomes illegal association

Effects of illegal association cannot enter into any contract cant sue any of its members & outsiders every member personally liable for liabilities incurred fine up to Rs. 10000 on members

119Filing of particulars of chargeWithin 30 days of creation + 30 days (extension)

120Intimation of payment or satisfaction of any charge in fullWithin 30 days of payment or satisfaction of charge

121Filing of particulars of Directors, Manager or Secretary Form No- 32 Within 30 days of incorporation

122Appoint Whole time CS when PUC > Rs. 5 crore

123Obtain CC from a PCS when

PUC > Rs. 10 Lac but < 5 croreNote- if whole time CS appointed, then no need to get CC

124EGM on requisition

Simply speaking, this is a case when a member wants the BOD to convene EGM, and deposit with the company a requisition, now it becomes the duty of BOD to arrange for meeting, if BOD does not do so, requisitionists themselves can convene the EGM.

Calling of EGM on requisition by BOD- within 21 days of deposit of requisition Holding of EGM by BOD- within 45 days of deposit of requisition Calling of EGM by requisitionists- within 3 months from the date of deposit of requisition

125Book closure ( when Books of members are closed) Max. period for which register of members can be closed in a year Max period for which register of members can be closed at any one time 45 days

30 days

126 Refund of application moneySection 69(5) in case of non- receipt of minimum subscription within 120 days of date of issue of prospectus 130 days without interest After 130 days with interest @ % p.aSEBI guidelines in case of non- receipt of 90% of issued amount within 60 days from date of closure of issue 78 days without interest Beyond 78 days with interest @ 15%

127Forfeiture of shares Power in AOA On the basis of grounds mentioned in AOA Notice to member must mention-1. Accrued amt + interest2. A day at least 14 days ahead from the date of service of notice on or before which the payment is required to be made BR- must be pass before actual forfeiture of shares

128Share certificate vs. share warrant

Basis of distinction

Share certificate

Share warrant

Who can issueAny company having share capitalPublic co. Ltd. By shares

Power in AOANot requiredRequired

Prior approval of CG not requiredrequired

stamp dutypayable on transfernot payable

Whether negotiable instrumentNoYes

Dividend paymentTo registered holderTo bearer of coupons attached to warrants

TransferBy registering a proper transfer deedBy deliver

MembershipHolder is a memberHolder not a member

SharesShare certificate can be issued in respect of partly paid up or fully paid up sharesShare warrant can be issued in respect of fully paid up shares

129Bonus shares Powers in AOA Only to existing shareholders BR recommending its decision to issue BS OR in GM for approving above BR Follow SEBI guidelines (listed co.) Bonus shares = fully PU Sources of Bonus issue- CRR + SP +FR

130Bonus sharesVs.Rights sharesBasis of distinctionBonus sharesRight shares

Sections78+80+20581

Trf of rightCan not be transferred to othersCan be transferred to other person

Application for sharesNot requiredrequired

Cash inflow for the companynoyes

PUAlways fully PUFully or partly

considerationWithout considerationFor cash

Capitalization of profits/reservesyesno

131Corporation vs. companyCompany u/s 2(10) & 3Corporation = Body corporate u/s 2(7)

132When court may lift corporate veil For protection of revenue- when co. making effort to evade tax For determination of enemy character of co. Where co. being used for some illegal or improper purpose Company acting as an agent of shareholders

132.Features of companyTransferabilityShares freely transferable in case of public company

Separate legal entitySeparate identity in the eyes of law (read soloman case)

Common sealCo. having no limbs so provided with this tool

Perpetual successionMembers come and go, but company remains

Limited liabilityAs per the case

Sue and be suedCo. can sue and be sued in its own name

AssetsCo. can hold assets in its own name

133.Disadvantages of a corporate form of enterprise Excessive formalities involving considerable time + money Excessive tax burden income taxable at maximum marginal rate i.e 30% Greater CSR Detailed winding up procedure Dilution in secrecy in business due to excessive statutory disclosure requirements

134Subsidiary company ( section 4) Composition of BOD controlled by other company or >50% shares with voting rights or voting rights held by other company

135Unlimited company Liability of members = unlimited i.e personally liable May or may not have share capital AOA mention the no. of members with which co. is being registered.

Inter-corporate Loans and Investments1)Applicability Public Company

2)When applicableAs stated above

3) Passing of unanimous BRInter corporate L/I/G/S within ceiling limit

4)Prior approval of S/H by way of SRBeyond ceiling limit

5) Method of passing SRUnlisted company in GMListed co. L/G/S = postal ballot u/s 192A Investment = either postal ballot Or in GM

6)Not prior approval required, only in case of guarantee. Exceptional circumstances exists unanimous BR has been passed according to provisions of this section BR is confirmed by members within 12 months in EGM or ensuring AGM whichever is earlier.

7)Approval of PFIs If there is any default made in as per T&C of loan and loan is beyond ceiling limit.

8)Interest rateNot less than prevailing prime lending rate of RBI

9) Provisions of sub section 5Entry in statutory register within 7 days Detailing Name, Account, Term, Purpose & Date.

10)ProhibitionDefaulter of section 58A are prohibited

11)Penalty- Default in maintenance of register= fine up to 5000 Rs. and 500 Rs. per day- Other contraventions= fine up to 50,000 Rs. and imprisonment up to 2 years.

12) Not applicablea) Pvt co.b) Bank/ insurance/ financing co. in the ordinary course of businessc) Any co. having object of financing industrial enterprises, or of providing infrastructure facilities.d) Investment companiese) Right issuef) Holding company to its wholly owned subsidiary (making L/I/G/S)

DividendSources of DividendCurrent years profits + Accumulated Reserves + Government Grants

Payment of Dividend Declared dividend shall be deposited in separate bank account within 5 days from the date of declaration. Declared dividend shall be paid to the shareholders within 30 days from the date of declaration. If the dividend is not paid or not claimed, then it shall be deposit in dividend Unpaid and Unclaimed Account within 7 days from the lapse of 30 days. If Dividend is not paid/ claimed up to 7 years from the date of transfer to unpaid 7 Unclaimed Account, then such amount shall be transfer to IEPF (Investor Education Protection fund) account after the lapse of such 7 years.

Transfer to ReservesIf rate of DividendTransfer to Reserve

10% of PUC10-12.5% of PUC12.5-15% of PUC 15-20% of PUC 20% of PUCNilMinimum 2.5% of Profit after TaxMinimum 5% of Profit after TaxMinimum 7.5% of Profit after TaxMinimum 10% of Profit after Tax

Investor Education and Protection Fund consisting of Unclaimed & Unpaid Dividend Unclaimed matured debentures & interest on them Unclaimed matured deposits & interest on them Income from investments made out of such fund (Company can invest from IEPF A/c) Application money received or due (Refund)

Companies (Dividend out of reserves) Rules, 1975

a) Maximum amount of withdrawal 10% of (PUC + F/R) 10% of (60+10) 7 croresb) 10% 0r average rate of last 5 P/Ys 10% or 20% 10% of 60 crores 6 croresc) Minimum balance kept in reserves 15% of PUC 15% of 60 crores 9 crores

Dividend out of capital profitsConditions:i. Provided in AOA.ii. Capital Profits must be realized.iii. Capital Profits must be left after the valuation of all other assets.

Interest on capitalPower in AOA or SR + CG + Interest to be capitalized to Building construction a/c or P& M a/c + max. int =4%, but CG may allow higher in special circumstances

Dividend to paid within 30 days of declaration - Exceptions Where the Dividend could not be paid by reason of the operation of any law. Where a shareholder has given directions to the company regarding the payment of dividend and these directions cannot be complied with; Where there is dispute regarding the right to receive dividend; Where the Dividend has been lawfully adjusted by the company against any sum due to it from the shareholder; Where for any other reason for failure to pay the dividend or to post the warrant was not due to any default on the part of the Company.

Companies (transfer of current profits to Reserves) Rules, 1975 {RULE- 3}

Transfer to reserves > 10% of Profit after TaxIf Dividend is being distributeda. Company has not issued bonus shares in the current year or any preceeding 3 financial years. - Rate of proposed dividend average rate of 3 preceeding financial years.

b. Company has issued bonus shares in the current year or any preceeding 3 financial years. - Amount of proposed dividend average amount of 3 preceeding financial years.

Dividend is not being distributeda. Amount of transfer to reserves < average amount of dividend of preceeding 3 financial years.

Sole Selling AgentAppointment of SSA by BOD With a condition that appointment shall cease to be valid if it is not approved by the company in the First General Meeting held after the date on which the appointment is made appointment is valid. Without condition appointment is void ab initio.Note: if with condition appointed then in GM, appointment may be disapproved and appointment is valid only upto such disapproval.

SSAMay be Individual, Firm or any body corporate

Substantial interest by SSA In relation to an Individual, means the beneficial interest held by such individual or any of its relatives, whether singly or taken together in the shares of the Company, the aggregate amount paid-up on which exceeds 5,00,000 Rs or 5% of paid up capital of the Company, whichever is lesser; In relation to a Firm, means the beneficial interest held by one or more partners of the firm or any relative of such partner, whether singly or taken together, in the shares of the Company, the aggregate amount paid up on which exceeds 5,00,000 Rs. or 5% of the paid up capital of the company, whichever is lesser;

If SSA having substantial interestPrevious approval of CG

If the paid up capital of the Company is Rs. 50 lakhs or more,

SR + CG

Compensation to SSAAccording to Section 294A, no Company shall pay or be liable to pay any compensation to its sole selling agent for the loss of his office in the following cases: Where the appointment of the sole selling agent ceases to be valid by virtue of sub section (2A) of section 294 i.e disapproved in GM Where the sole selling agent resigns his office in view of reconstruction of the company or its amalgamation with any other body corporate or bodies corporate or bodies corporate and is appointed as the sole selling agent of the reconstructed company or of the body corporate resulting from the amalgamation. Where the sole selling agent resigns his office, otherwise than on the reconstruction of the Company or amalgamation as aforesaid. Where the sole selling agent has been guilty of fraud or breach of trust in relation to, or of gross negligence in, the conduct of his duty as the sole selling agent. Where the sole selling agent is responsible for the termination of sole selling agency. In other cases compensation for loss of office may be paid: Permissible period: lower of-i. The unexpired tenure of SSA; orii. 3 years. Basis: average remuneration shall be based on remuneration actually earned by SSA during:i. Immediately preceding 3 years; orii. Such lesser period for which SSA was in office.

Oppression vs. Mis- ManagementOppression (Sec. 397)Mis-Management (Sec. 398)

i. Oppression shall be present and continuous1. Mis-Management may be a. Present and continuous, orb. Future possibility

ii. Any member(s) may file compliant to CLB that the affairs of the company are being conducted in a manner which is a. Oppressive to be one or more members, orb. Prejudicial to the public interest2. Any member(s) may file a complaint to CLB that the affairs are being conducted in a manner, or are likely to be conducted in a manner which is a. Prejudicial to the interest of the company, orb. Prejudicial to the public interest.

iii. The situation of company is so deteriorated that the CLB is of the opinion that it is just & equitable to wind up the co. but winding up will further prejudice the interest of complaining shareholders, then CLB may pass the suitable remedial order u/s 4021. NOT APPLICABLE

CB may pass an interim order from the date of application before passing final order.

ADDRESS: B-20-1458, KRISHNA NAGAR, PAU ROAD. LUDHIANA.M.No-9888745849, 9780808413 Page 17