Companies Act India

Ans:  Companies on the basis of control or Holding :  Holding and Subsidiary Companies  Associate companies or holding companies: As per Section 2(46) “holding company”, in relation to one or more other companies, means a company of which such companies are subsidiary companies. As per Section 2(87) “subsidiary company” or “subsidiary”, in relation to any other company (that is to say the holding company), means a company in which the holding company— (i) controls the composition of the Board of Directors; or (ii) exercises or controls more than one-half of the total share capital either at its own or together with one or more of its subsidiary companies. So , the holding company will have subsidiary company.

Ans: Section 2(68) of Companies Act, 2013 defines private companies. According to that, private companies are those companies whose articles of association restrict the transferability of shares and prevent the public at large from subscribing to them. This is the basic criterion that differentiates private companies from public companies. The Section further says private companies can have a maximum of 200 members (except for One Person Companies). This number does not include present and former employees who are also members. Moreover, more than two persons who own shares jointly are treated as a single member. This definition had previously prescribed a minimum paid-up share capital of Rs. 1 lakh for private companies, but an amendment in 2005 removed this requirement. Private companies can now have a minimum paid-up capital of any amount.  These are some features that distinguish private companies from other types of com...

Ans: Ans: On the basis of liabilities, the company is divided into three types:  1. Company limited by shares: The liability of members is limited by shares and is mentioned in the memorandum of association. E.g., If a person buys 10 shares of Rs 100, the liability of company will be of Rs 1000 only( 100 multiplied by 10) if it is unpaid.  If it is paid, there will not be any liability of shareholder.  According to Section 2 (22) of the Companies Act 2013, a company that is limited by shares is refers to a company that has the liability of the members limited by such an amount that is unpaid on their respectively held shares. The company can enact this liability while the company is in existence or as it is ending. 2. Companies limited by Guarantee: The members of the company give guarantee of fixed amount and the liability of member will be at the time of winding of the company. It means that the member or shareholder of the company will pay a certain amount at the tim...

Ans:  On the basis of incorporation, the company is divided into three types:  1. Chartered Company: The Companies like East India Company,  Bank of Japan are the Companies which were started under charter before independence are chartered Companies. Chartered act, 1813 is also called East India Company act, 1813.  2. Statutory Company: The Statutory Companies are formed by passing the act. The Companies like LIC, RBI, UTI (Unit trust of India) are formed under LIC act, 1956, RBI act, 1934 and UTI act, 1963. These companies are not required to have memorandum of association and articles of association. 3. Registered Company: The Companies which are registered under Company Act, 1956 and Company Act, 2013 are the registered companies. Keywords used:  First, a charter can be defined broadly as the highest law of an entity. More specifically: In corporate law, the articles of incorporation. In public law, the instrument by which a municipality is incorpora...

Ans:  The companies are categorised into four types according to the Companies Act, 2013:  1. On the basis of incorporation.  2. On the basis of liability. 3. On the basis of Members. 4. On the basis of Control or Holding. The three basic types of companies incorporated under the Companies Act, 2013 are Private Company, Public Company and One Person Company. These are the companies on the basis of members.  The three basic types of companies on the basis of liability are:  Company limited by shares Company limited by guarantee Unlimited Companies Companies on the basis of incorporation : 1. Chartered companies 2. Statutory Companies  3. Registered Companies  Companies on the basis of members : Public Company  Private Company  One Person Company  Companies on the basis of control or Holding :  Holding or Subsidiary Companies  Associate companies 

Ans: Foreign Company is defined under section 379 to 393 of companies act,  2013 . 

Ans:  The concept of the Limited Liability Partnership (LLP) was introduced in India in 2008. The Limited Liability Partnership Act, 2008 regulates the LLPs in India. Minimum two partners are required to incorporate an LLP. However, there is no upper limit on the maximum number of partners of an LLP.

Ans: Company act, 2013 is applicable on the following types of companies: 1.Insurance Company 2. Banking Company 3. Electricity Company 4. Incorporated under this act. 5. Foreign Company( Section 379 to Section 393 of Company act, 2013 ) 6. Special Act Company 7. Limited liability Company 8. Etc. Pms: Banking, insurance, electricity, foreign,  Incorprated under this act, Special act company, Limited Liability Company 

Ans:  The companies act 1882, The companies act 1913 , The companies act, 1956 are previous companies act in India.

Ans: According to section 2(20) of companies act, 2000, the company means a company incorporated under this act or under any previous company law. The companies act 1882, The companies act 1913 , The companies act, 1956 are previous companies act in India. 

Ans: The company is derived from the latin word 'com' which means together and 'panis' means bread. When persons work together to earn bread, the company is formed. Company is an artificial person and has common seal.

Ans: Companies act 1956 comprises of 658 sections, 15 schedules and 13 parts whereas companies act, 2013 comprises of 470 sections and 7 schedules and 29 chapters.  The 188 sections of Companies act, 1956 have been dropped.   India: Parliament is bicameral legislature whereas china is unicameral legislature.  India is republic of India because its head is appointed by citizens of India. Companies act , 2013:  Lok Sabha : on 18th December,  2012 Rajya Sabha: on 8th August , 2013  President signed on 29 th August , 2013. Enacted and enforceable in all over India from 1st April, 2014.

Ans: The Central Government has constituted National Company Law Tribunal (NCLT) under section 408 of the Companies Act, 2013 (18 of 2013) w.e.f. 01st June 2016. In the first phase , the Ministry of Corporate Affairs have set up eleven Benches, one Principal Bench at New Delhi .

Ans: In the 17th century, the joint stock charters were awarded by the crown to monopolies such as the East India Company. The world's first modern limited liability law was enacted by the state of New York in 1811. In England,  it was to be incorporated a joint stock company following the Joint Stock Companies Act 1844 as well as Joint stock companies act, 1850 even if the investors in such companies carried unlimited liability until the Limited Liability Act 1855.

Ans: In company law, the perpetual succession is the continuation of the existence of company/corporation or other organization despite the death, retirement, bankruptcy, insolvency, insanity and change in membership or an exit from the business of any owner or member, or any transfer of stock etc. x

Ans: According to section 165 of companies act, 2013, a person can not act as a director (any type) of more than 20 companies at the same time. This number can ,although be minimized by a company with respect to its own director by passing a special resolution.   Section 165(1):  No person, after the commencement of this Act, shall hold office as a director , including any alternate directorship, in more than twenty companies at the same time: Provided that the maximum number of public companies in which a person can be appointed as a director shall not exceed ten. 165(2) Subject to the provisions of sub-section (1), the members of a company may, by special resolution, specify any lesser number of companies in which a director of the company may act as directors.  165(3) Any person holding office as director in companies more than the limits as specified in sub-section (1), immediately before the commencement of this Act shall, within a period of one year from su...

Question 2: Briefly describe the process Rajiv and his brothers will have to undertake to create their company. Answer: Firstly, they will have to file with the Registrar of Companies an application form with requisite fees. This form will be accompanied with its Memorandum and Articles of Association. This Memorandum will contain details like their company’s name (suffixed with “Pvt. Ltd.”), their objectives, the address of their office, etc. After this, the Act also requires them to provide their own personal details to the Registrar. The company will come into force after the Registrar grants a certificate of incorporation to them.

Question 1: Rajiv owns a garments shop with his two brothers. They decided to diversify its business by creating a company that will manufacture garments. They are facing some financial difficulties in this regard. For example, they collectively have just Rs. 80,000 as capital. Furthermore, they wish to limit their liabilities because of such financial shortcomings. Can they form a private company under such conditions? Answer: Rajiv and his brothers can definitely incorporate a company under such conditions. Although the Companies Act had previously prescribed a minimum capital requirement of Rs. 1 lakh, this is now omitted. Considering the second condition, they can opt for a company limited by shares or guarantee. Both company limited by shares or company limited by guarantee limit the liabilities.  

Ans:  Limitations of Private Companies: Despite all the advantages they offer, private companies also have the following limitations: Private companies cannot freely transfer shares to the public. They find it more difficult than public companies to access external financial support. Shareholders have greater risks and liabilities.

Ans: Section 2(68) of Companies Act, 2013 defines private companies. According to that, private companies are those companies whose articles of association restrict the transferability of shares and prevent the public at large from subscribing to them. This is the basic criterion that differentiates private companies from public companies. This definition had previously prescribed a minimum paid-up share capital of Rs. 1 lakh for private companies, but an amendment in 2005 removed this requirement. Private companies can now have a minimum paid-up capital of any amount. No minimum capital required: There was a minimum paid-up share capital requirement of Rs. 1 lakh previously, but that is omitted now. The Section further says private companies can have a maximum of 200 members (except for One Person Companies). This number does not include present and former employees who are also members. Moreover, more than two persons who own...

Ans: There are total 29 chapters in company law and national company law tribunal and appellate tribunal is mentioned under chapter 27 and sections 407 to 434 of companies act, 2013.  x

Ans: Company limited by guarantee is defined under section 2(21) of companies act,  2013 and Company limited by shares is defined under section 2(22) of companies act, 2013. The unlimited liability companies are mentioned under section 2(92) of companies act,  2013. Company is defined under section 2(20) of companies act,  2013. x

Ans: Resident Director is defined under section 149(3) of companies act, 2013,  a person must be the resident in India for atleast 182 days in previous calender year to become resident director.  Nominee director is nominated by financial institution and is Non-executive and non-independent director. It is mentioned under section 149(7) of companies act, 2013.

Ans: The doctrine of indoor management  favours the outsider person whereas doctrine of constructive notice favours the company. Doctrine of constructive notice: x Memorandum of association(399) and articles of association. Doctrine of indoor management:   General meeting and internal affairs of the company. 

Ans: (1) Every company shall have a Board of Directors consisting of individuals as  directors and shall have— (a) a minimum number of three directors in the case of a public company , two directors in the case of a private company , and one director in the case of a One Person Company ; and (b) a maximum of fifteen directors: Provided that a company may appoint more than fifteen directors after passing a special resolution: Provided Further that such class or classes of companies as may be prescribed, shall have at least one woman director. (2) Every company existing on or before the date of commencement of this Act shall within one year from such commencement comply with the requirements of the provisions of sub-section (1). (3) Every company shall have at least one director who stays in India for a total period of not less than one hundred and eighty-two i.e., 182 days during the financial year: Provided that in case of a newly incorporated company the requirement under this sub...

Ans: According to section 11 of Indian Contract Act, 1872, a minor is not eligible to enter into a contract. Thus, a minor can not be the member of company, even if the guardian of minor can purchase shares on behalf of minor. In this case , the guardian of minor works as a trustee and a trustee can not be the member of a company. If in the ignorance of fact of minority, director alloted the shares to the minor and register his name on the register of companies, the company can cancel such allotment and remove his name from the register of companies on knowing the fact.

Ans: A foreigner can become the member of Indian Company only when he is allowed by Reserve Bank of India to do so. But his power of voting and his right to receive notices is suspended during the time of war. Under the Indian Companies Act, 2013, six types of directors can be appointed in a company, i.e., Women Director, Independent Director, Small Shareholders Director, Additional Director, Alternative and Nominee Director. The Act does not bar a foreign national to be appointed as any of the above-mentioned directors in Indian Companies.

Ans: Karta is the head of hindu undivided family and Sons or daughters, both are considered to be coparceners and share equal legal rights and liabilities over their ancestral property.  Disadvantages: Karta is dominant and has unlimited liability.  Only the family members are included.  a person who shares jointly with others in an inheritance.

Ans: Section 2(62) of the Companies Act, 2013 defines a 'One Person Company' as a company which has only one person as a member. Simplifying thereof, a 'One Person Company' can be formed by only one member and one director. Importantly, the member and director can be the same person. Section 2(68) of Companies Act, 2013 defines private companies. According to that, private companies are those companies whose articles of association restrict the transferability of shares and prevent the public at large from subscribing to them. As per Section 2 (71) of the Companies Act, 2013, public company is a company which (a) is not a private company, (b) has minimum capital of Rs. 5 lakh or such higher paid-up capital as may be prescribed, and (c) is a private company which is a subsidiary public company.

Ans: There are four forms of business ownership in India:  1. Sole Proprietorship  2. company  3. Partnership firm 4. Hindu Undivided family  HUF is treated as a ‘person’ under Section 2 (31) of the Income Tax Act, 1961 (IT Act).

Ans: Though an OPC and sole proprietorship have only one person/member, their functioning differs. OPC has the features of a company, while the sole proprietorship does not enjoy the benefits of a company . Thus, the sole proprietor has unlimited liability, and the business does not have perpetual succession. The sole proprietorship is registered under shop and establishment act of states.  In company law, perpetual succession is the continuation of a company's/corporation's or other organization's existence despite the death, retirement, bankruptcy, insolvency, insanity, change in membership or an exit from the business of any owner or member, or any transfer of stock etc.

Ans: 1. Partnership firm requires partnership deed whereas incorporation of company requires memorandum of association and articles of association.   2. A member whose name is entered in the register of members of company is member of company. It is not mandatory that the member will be the the shareholder. The minimum number of members in the partnership firm are 2 and minimum number of members for private limited company are 2 and minimum number of members for public limited company are 7 and one for one person company.  3. The maximum number of partners in partnership firm are 100.  The maximum number of members in private limited company are 200 and maximum number of members in  public limited company are unlimited.  4.  The company comprises of members and directors.  Thus minimum number of directors as per section 149(1) of companies act are 2 in case of private limited company and 3 in case of public limited company and one for a one person...

Ans: A company is an artificial person and has common seal and contains seperate legal entity. 

Ans: The company is defined in section 2(20) of companies act,  2013 . According to section 2(20) of companies act , 2013 , the word company is derived from com means together and panis means bread. 

Ans: Section 5(3) which implies that certain provisions within the Articles of Association will not be alterable by merely passing a special resolution, and will require a much more lengthy and elaborate process. x

Ans: Memorandum of association is a public document according to Section 399 of the Companies Act, 2013. Hence, any person who enters into a contract with the company is expected to have knowledge of the MOA. It contains details about the powers and rights of the company and not about company 's persons.  x

Ans: According to section 2(56) of Companies act, 2013, the memorandum of association are of two types i.e., memorandum of association as originally framed and memorandum as altered from time to time.  According to section 2(5) of companies act, 2015, articles of association are of two types as articles of association originally framed and articles of association as altered from time to time.  x

Ans:  On the basis of control On the basis of incorporation:  1. Chartered  company  2. Statutory Company 3. Registered Company  On the basis of liability:  1. Company limited by shares  2. Company limited by guarantee  3. Unlimited Companies  On the basis of members :  1. Private company  2. Public Company  3. One Person Company 

Ans: CILM On the basis of Control  On the basis of Incorporation  On the basis of liability  On the basis of members x

Ans:  According to section 149(1) of companies act,  2013, the number of directors are as follows:  In private company, there is minimum two directors and two members whereas in public company, there are minimum three directors and seven members and in one person company,  there is minimum one director and one member.  The maximum number of directors in private company, public company and one person company are 15 but by passing special resolution and the maximum number of members in private company are 200 and maximum number of members in public company are unlimited. 

Ans: According to section 149(1) of companies act, 2013, there must be atleast one woman director.  x

Ans:  Thus, the penalty under Section 172 of the companies Act , 2013 applies in case of non-compliance regarding the appointment of a woman director. Section 172 of the Act lays down that the company and every officer in default will be punished with a fine that shall not be less than Rs.50,000 but may extend up to Rs.5,00,000.  x

Ans:   Director, woman director, members, , one person company,  corporate social responsibility, financial year and e- governance.  Director : The maximum directors according to Companies Act, 1956 are 12. The maximum directors according to Companies Act, 2013 are 15 but by passing a special resolution . According to section 149(1)(a) of the Companies Act, 2013 , every company shall have a minimum number of 3 directors in the case of a public company, two directors in the case of a private company, and one director in the case of a One Person Company. A company can appoint maximum 15 fifteen directors but by passing a special resolution according to 149(1)(b) and also the company must have atleast one woman director according to Companies act 149(1)(b).  The maximum members in a private company according to Company Act, 1956 are 50 (Section 68 ) whereas the Maximum members in a private company according to company act, 2013 are 200 (Section 71) . One...

Ans:  The joint stock companies act 1844 and companies act, 1913 were the acts for corporations during British Period. The joint stock companies act, 1844 were amended in 1857 and 1866. 

Ans: Companies act 1956 comprises of 658 sections, 15 schedules and 13 parts whereas companies act, 2013 comprises of 470 sections and 7 schedules and 29 chapters.  The 188 sections of Companies act, 1956 have been dropped.  x

Ans: Legislature refers to the law making body of a state. It is the first organ of the government. It has the power to make or change laws and oversee the administration of the government. The legislature can be of two types: unicameral and bicameral. Unicameral legislature has only one house, assembly or chamber for lawmaking. Bicameral legislature has two houses for law making.  In india , there is bicameral legislature whereas in China, there is unicameral legislature.  x