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Company Law

Company Laws in India

An Insight on India's Company Laws - TRIPS, Companies Bill, 2009, Mergers and Acquisitions, Incorporation of companies, Duties & Liabilities of a Company, Company laws Forms - Free Downloads

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Important Notice:
The Central Government has notified the constitution of National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT) on 1st June, 2016. The Company Law Board (CLB) stands dissolved with the constitution of these bodies.

The word 'Company' is an amalgamation of the Latin word 'Com' meaning "with or together" and 'Pains' meaning "bread". Originally, it referred to a group of persons who took their meals together. A company is nothing but a group of persons who have come together or who have contributed money for some common person and who have incorporated themselves into a distinct legal entity in the form of a company for that purpose. Under Halsbury’s Laws of England, the term "company" has been defined as a collection of many individuals united into one body under special domination, having perpetual succession under an artificial form and vested by the policies of law with the capacity of acting in several respect as an individual, particularly for taking and granting of property, for contracting obligation and for suing and being sued, for enjoying privileges and immunities in common and exercising a variety of political rights, more or less extensive, according to the design of its institution or the powers upon it, either at the time of its creation or at any subsequent period of its existence. However, the Supreme Court of India has held in the case of State Trading Corporation of India v/s CTO that a company cannot have the status of a citizen under the Constitution of India.

A company as an entity has several distinct features which together make it a unique organization. The following are the defining characteristics of a company:-

Separate Legal Entity :

On incorporation under law, a company becomes a separate legal entity as compared to its members. The company is different and distinct from its members in law. It has its own name and its own seal, its assets and liabilities are separate and distinct from those of its members. It is capable of owning property, incurring debt, borrowing money, having a bank account, employing people, entering into contracts and suing and being sued separately.

Limited Liability :

The liability of the members of the company is limited to contribution to the assets of the company upto the face value of shares held by him. A member is liable to pay only the uncalled money due on shares held by him when called upon to pay and nothing more, even if liabilities of the company far exceeds its assets. On the other hand, partners of a partnership firm have unlimited liability i.e. if the assets of the firm are not adequate to pay the liabilities of the firm, the creditors can force the partners to make good the deficit from their personal assets. This cannot be done in case of a company once the members have paid all their dues towards the shares held by them in the company.

Perpetual Succession:

A company does not die or cease to exist unless it is specifically wound up or the task for which it was formed has been completed. Membership of a company may keep on changing from time to time but that does not affect life of the company. Death or insolvency of member does not affect the existence of the company.

Separate Property:

A company is a distinct legal entity. The company’s property is its own. A member cannot claim to be owner of the company's property during the existence of the company.

Transferability of Shares:

Shares in a company are freely transferable, subject to certain conditions, such that no share-holder is permanently or necessarily wedded to a company. When a member transfers his shares to another person, the transferee steps into the shoes of the transferor and acquires all the rights of the transferor in respect of those shares.

Common Seal:

A company is a artificial person and does not have a physical presence. Therefore, it acts through its Board of Directors for carrying out its activities and entering into various agreements. Such contracts must be under the seal of the company. The common seal is the official signature of the company. The name of the company must be engraved on the common seal. Any document not bearing the seal of the company may not be accepted as authentic and may not have any legal force.

Capacity to sue and being sued:

A company can sue or be sued in its own name as distinct from its members.

Separate Management:

A company is administered and managed by its managerial personnel i.e. the Board of Directors. The shareholders are simply the holders of the shares in the company and need not be necessarily the managers of the company.

One Share-One Vote:

The principle of voting in a company is one share-one vote. I.e. if a person has 10 shares, he has 10 votes in the company. This is in direct contrast to the voting principle of a co-operative society where the "One Member - One Vote" principle applies i.e. irrespective of the number of shares held, one member has only one vote.

Filing of petition/appeals etc in National Company Law Tribunal

Characteristics of a company
Different Types of Company
Promotion and Formation of a Company
Membership of a Company
Capital of a Company
General Meetings
Accounts and Audit
Remuneration of Directors
Inter Corporate Loans and Investments:
Directors and Managing Directors:
Meetings of Board:
Board's powers and restrictions:
Loans to directors:
Disclosure of Director's Interest:
Prevention of Oppression and Mismanagement:
Arbitration, Compromises, Arrangements & Reconstruction
Company law Discussion Forum - Hot Topics:
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Forming A Company In India

The Companies Act of 1956 sets down rules for the establishment of both public and private companies. The most commonly used corporate form is the limited company, unlimited companies being relatively uncommon. A company is formed by registering the Memorandum and Articles of Association with the State Registrar of Companies of the state in which the main office is to be located.

Foreign companies engaged in manufacturing and trading activities abroad are permitted by the Reserve Bank of India to open branch offices in India for the purpose of carrying on the following activities in India:
# To represent the parent company or other foreign companies in various matters in India, for example, acting as buying/selling agents in India, etc.

# To conduct research work in which the parent company is engaged provided the results of the research work are made available to Indian companies

# to undertake export and import trading activities

# to promote possible technical and financial collaboration between Indian companies and overseas companies.

Application for permission to open a branch, a project office or liaison office is made via the Reserve Bank of India by submitting form FNC-5 to the Controller, Foreign Investment and Technology Transfer Section of the Reserve Bank of India. For opening a project or site office, application may be made on Form FNC-10 to the regional offices of the Reserve Bank of India. A foreign investor need not have a local partner, whether or not the foreigner wants to hold full equity of the company. The portion of the equity thus not held by the foreign investor can be offered to the public.
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Registering a Company In India

Laws governing Public Interest Litigation in India

Human Rights, Environment & Industrial Disaster: Globalization has influenced trade all over the world; companies have looked

Laws Regulating Mergers & Acquisition In India: A merger is a combination of two companies where one corporation is completely

Vicarious Liability Of Directors And Officers On Bouncing Of Cheques: In the light of decisions of the Apex Court, provisions relating to section 141(1)

Strikes and Lockouts: In any Industrial endeavour co-operation of labour and capital is quite

Company Law Board v. Arbitral Tribunal: The legislature never intends to contradict itself

Operational Risk Management under Basel II in the light of COSO-ERM& Maturity Model: Operational risk in today’s tech savvy organization is of great concern which emphasizesr,...

Trade Secret: Trade secret is a formula, process, device, or other business information

Mergers In Pharma Sector: Takeovers in the Pharmaceutical industry are the current rage ll over the world

WTO & Development In Developing Countries: The problem of our age is growing economic disparity between developed and industrialized

Changing Sovereignty in The Light Of WTO: Sovereignty means the right of the nations to govern them. This concept has fostered

Odious Debt: It seems there are not too many lawyers who have an understanding of or about the technical meaning of odious debts

Companies Bill, 2009: The Companies Act, 1956 is the principal landmark legislation that governs companies in India

Lacunae of Operational Risk: The scenario of banking all across the world has experienced a dynamic increase in

Incorporation of companies: A Private Limited Company is a Company limited by shares in which there can be maximum 50 shareholders

Mergers and Acquisitions: Merger is defined as combination of two or more companies into a single company where one survives.

From GATT to WTO: In the article I have discussed how WTO has emerged. The World Trade Organisation, the primary international

Wagering Contracts: The meaning of ‘wagering’ is staking something of value upon the result

TRIPS: Developing countries have raised a range of different concerns with the

Corporate Social Responsibility: Globalization has influenced trade all over the world

External Commercial Borrowings: It provides quite a few advantages to the borrower as well

Duties & Liabilities of Officers of a Company: The statutory principles of Corporate Law in India

Protection Of The Investors By Sebi: This particular paper highlights the dedication of the Securities and Exchange Board of India (SEBI

Relevance of Quasi-Contracts: There are certain situations wherein certain persons are

Listing & Delisting of Securities: Listing & delisting of securities is one of the important process in trading. In the market condition

E-Cheque System in India: Amendments in the Sections 6 and 1(4), coupled with the introduction of 81 A to the Negotiable Instruments Act, 1881

Shareholders Agreement: Whether an excercise of such "put option" ie a right to sell, can be enforced by the investors without violating SCRA, 1956

Alternate Dispute Resolution & the Common Man: Alternate Dispute Resolution popularly called by its generic acronym ADR

Infrastructure Investments in India: For an emerging economy like India, with more than a billion people, infrastructure

LLP in India: Introduction of limited liability partnership in India and what LLP actually is

Section 372A of the Companies Act: discuss practical aspects and provisions of the Section 372A of the Companies Act, 1956

Anti-Dumping: Liberalization, Privatization and Globalization [known as LPG] have

Indian Domestic Arbitration: In India, laws/rules that govern the arbitration process are laid down in Arbitration and Conciliation Act, 1996

Downward trend of Real Estate - A boon for NRI’s: on the changing face of the Indian real estate in India and how this downfall could help the NRIs

Directors of a Company: company is a legal entity and does not have any physical existence

Foreign Direct Investment In Telecommunications Sector: One of the most significant contributors to India’s booming economy is the

Promoter/Promoter Group: The term "Promoter" finds its place in the company law, it has not been defined anywhere under the Companies Act, 1956

Predatory Pricing: Predatory pricing is a strategy that entails a temporary price below

Winding Up of a Company: Winding-up in literal sense, means to bring to a conclusion or an end by putting in order

Domicile of A Pseudo-Foreign Corporation: How Indian Laws Are Ambiguous And Contradicting With Respect To The Determination Of Domicile
The Companies (Amendment) Bill 2001: The Bill proposes to set up a National Company Law Tribunal (NCLT) which

Need For Incorporation Of Business: Hundreds of commercial companies emerged in Britain in the 300-year long era of the charter company that commenced from the end of the

Fiduciary Duty Of An Auditor: The Companies Act, 1956 requires that every balance sheet and profit and loss account of a company should give a "true and fair view"

External Commercial Borrowings: The Master Blaster Of Corporate World: Well this topic is not new, but this three letter word ECB contains livelihood till some extent of persons

Securitisation: A Boon for the Banking Sector: With advent of the Recovery of Debts Due To Banks and Financial Institutions Act, 1993

Can Independent Non-Executive Directors: My Lords, a corporation is an abstraction. It has no mind of its own any more than it had a body

Non Performance Of Non-Performing Assets: Banking sector reforms in India has progressed promptly on aspects like interest rate deregulation, reduction in statutory

Market Ambushing: Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods,

Poison Pills: Poison pills form the very heart of the corporate re-structuring, mergers and acquisitions currently, hostile takeovers account for 19 per cent of global mergers and acquisitions

Nomination By Shareholders Of A Director From The Promoter Company: When the shareholders nominate a person as director from the promoter company, whether such person

Foreign Currency Convertible Bonds: India is the 7th largest and 2nd most populous country in the world. It is also the 4th largest economy in the world. A series of striving monetary reforms

Third Party Insurance: This paper is an endeavour to explain the relevance of third party insurance? What is third party insurance? Who is a third party? Why third party insurance

Combating Hostile Takeovers: This article analyses the concept of ‘Hostile Takeovers’ and the various defensive strategies adopted by the companies to ward off unwarranted takeovers

Choice of law by the parties to the contract: In this era of globalization where a contract contains one or more foreign elements, the difficult and complicated

Mergers: Merger is a tool used by companies for the purpose of expanding their operations often aiming at an increase of their long term profitability

SEBI - Insider Trading: aims to equip the readers with the basic concept of insider trading. it gradually proceeds from an introduction of the concept to the regulations

Bank Frauds: Fraud is any dishonest act and behaviour by which one person gains or intends to gain advantage over another person. Fraud causes loss to the victim directly or indirectly

Corporate Insolvency & Restructuring: In order to discipline the Indian corporate insolvency and restructuring process, several efforts have been made, viz. SICA, SFC, DRT Act, SARFAESI.

Retail Sector & FDI: the present and future of retail trading in India. It also gives an overview of the expected investments in retail sector by the

Mergers & Takeovers: Businesses were competitive locally expanded to the national arena. Competitiveness in the national arena is now forcing

Options Available For A Foreign Entity To Invest In India: Foreign Direct Investment has emerged as an eminent source of economic development and employment generation

Industrial Disputes: In all the countries, over a period of time, the state has assumed power to regulate industrial relations.

Whistle-blowers and the law: the process by which employees working in a public or private corporation blow the whistle or disclose claims of malpractices by or within the organizations

Conditions Implied and Express: Sale of Goods Act is one of very old mercantile law. Sale of Goods is one of the special types of Contract

Jurisdiction in International Letter of Credits: The standard letter of credit is not very common in purely domestic transaction as a form of payment. The cost and the lengthy process make the letter

Legal Position Of Managing Director: A managing director, as defined in Section 2(26), means a director who is encrusted with substantial powers of management

Right to strike under Industrial Dispute Act, 1947: Every right comes with its own duties. Most powerful rights have more duties attached to them.

Mergers And Amalgamations: procedure has been divided into two parts i.e. procedure to followed by the transferor company

Criminal Liability Of Corporate Bodies: In A company has none of features that characterize a living person

Regulation of Debentures Issue- An overview: A debenture is an instrument of debt executed by the company acknowledging

Constitutional Documents of a Company: From the Deed of Settlement present in the 1844 Joint Stock Companies Act

Why is NBFC a House Divided unto Itself?: NBFC’s (Non Banking Financial Companies) are reported periodically to be under the RBI (Reserve Bank of India)

Demerger or Hiving-Off: is a form of restructure in which owners of interests in the head entity gain
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Company law actBare Acts and Judgments
Company lawLandmark Cases - Company law

Types of Companies

1.Public Company means a company which not a private company.

2.Private Company means a company which by its articles of association :-

Restricts the right of members to transfer its shares
Limits the number of its members to fifty. In determining this number of 50, employee-members and ex-employee members are not to be considered.
Prohibits an invitation to the public to subscribe to any shares in or the debentures of the company.
If a private company contravenes any of the aforesaid three provisions, it ceases to be private company and loses all the exemptions and privileges which a private company is entitled.

Following are some of the privileges and exemptions of a private limited company:-

Minimum number is members is 2 (7 in case of public companies)

Prohibition of allotment of the shares or debentures in certain cases unless statement in lieu of prospectus has been delivered to the Registrar of Companies does not apply.

Restriction contained in Section 81 related to the rights issues of share capital does not apply. A special resolution to issue shares to non-members is not required in case of a private company.

Restriction contained in Section 149 on commencement of business by a company does not apply. A private company does not need a separate certificate of commencement of business.

Provisions of Section 165 relating to statutory meeting and submission of statutory report does not apply.

One (if 7 or less members are present) or two members (if more than 7 members are present ) present in person at a meeting of the company can demand a poll.

In case of a private company which not a subsidiary of a public limited company or in the case of a private company of which the entire paid up share capital is held by the one or more body corporates incorporated outside India, no person other than the member of the company concerned shall be entiled to inspect or obtain the copies of profit and loss account of that company.

Minimum number of directors is only two. (3 in case of a public company)

The Company Law Board on being satisfied that the infringement of the aforesaid 3 conditions was accidental or due to inadvertence or that on other grounds, it just an equitable to grant relief, may grant relief to the company from the consequences of such infringement. The infringement of the aforesaid 3 conditions does not automatically convert a private company into a public company. It continues to remain a private company; it merely ceases to be entitled to the privileges and exemptions available to a private company.

Insurance Companies

Insurance Act came into force on July 1, 1939 to consolidate and amend the law relating to business of insurance both of life and general insurances; this replaced earlier Life Assurance Companies Act, 1912 and Provincial Insurance Societies Act, 1922 which were only in respect of Life insurance. The basic object of the Act was to ensure that vast power concentrated in the hands of insurance companies was not abused and the policy holder’s money was safely invested. However, inspite of the regulations by the law, and restrictions by the Controller of Insurance there was much abuse of the trust by the private insurers therefore this lead to step towards nationalization of life insurance in 1956, and of general insurances in 1972, therefore insurance business came to be conducted through Central Government under life insurance corporations and general insurance corporations.
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Bill of Lading
Restraint Of Trade And Post Employment Covenants
Letter Of Credit
Origin and Evolution of the Modern Company Law
Tautological Aspect Of English Mortgage In India
Are Trade, Commerce and Intercourse Free
What Is Globalization
Interpretation of Fiscal Statutes
The First Premium
Bankers Right to lien and set off
Lifting The Corporate Veil
Director's Liability
Dematerialized Securities
Office Or Place Of Profit - Scope & Proposed
Buy Back of shares under the Companies Act, 1956
Takeover Code - An Insight
Recovery of debts due to banks & financial Institutions
International Trade & Finance
Corporate Insolvency Laws In India
Evaluating Trade Secrets Under The IPR Paradigm
Venture Capital
Exporter's Interest Protection & Multi Modal Transportation Of Goods Act
Corporate Crimes:
Corporate Criminal Liability:
Liquidated Damages v. Penalty
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