Companies Act India

Ans: The Memorandum of Association ("MOA") of a company sets out the basic reasons and features with which the company is incorporated. The 'conditions contained in the Memorandum of Association are actually the basis of the existence of the company such as its name, the situation of its registered office, the objects for which the company is established, whether the liability of the members is limited or unlimited, the authorized capital of the company and the undertaking by the subscribers to subscribe to a particular number of shares.

Ans: The Articles of Association of a company is a regulating document of a company that sets out the rules, regulations, and contracts between the members of the company and company. They have been defined under Section 2(5) of the Companies Act, 2013 .

GENERAL CORPORATE, INVESTMENT,M&A & FINANCING Amendment of the Articles of Association of a company. Both terms often refer to the joining of two companies, but there are key differences which are involved in when to use them. A merger would occur when two distinct entities combine forces to create a new, joint organization. Meanwhile, an acquisition would refer to the takeover of one entity by another entity. 

Ans: In the case of Pramatha Nath Sanyal C. Kali kumar Dutt, the company gave an advertisement about the remaining shares of company in newspaper. The court held that the advertisement of newspaper will also be considered as prospectus. The company will have to mention about itself in the prospectus i.e. working areas of company, litigation on company if any,  etc.

Ans:  The prospectus is a document and it can be a circular or advertisement or anything that is issued to raise funds from public at large and not from existing shareholders is known as prospectus.

Ans: Prospectus is an invitation to offer and not a general offer. First of all,  the prospectus is filed in SEBI by public company. It is that public company of which public issue i.e., IPO or FPO is about to come. A Follow-On Public Offer (FPO) is a type of public offering in which a company which is already listed on the stock exchange issues new shares of its stock to the public. The companies that have already raised funds through IPOs by issuing their shares for the first time can also issue additional shares through FPOs.

Ans: A prospectus is a document through which a public company raises the fund. Prospectus is mentioned under section 2(70) of Companies Act, 2013. Public company is mentioned under section 2(71) of Companies Act,  2013. The promoters of company have significant role in creating the prospectus. Promoters are mentioned under section 2(69) of Companies Act, 2013. If the public company would like to raise fund , the public company can raise the fund through prospectus.

Ans: The voting right will be in the percentage of his shares in the paid-up equity share capital of the company. Therefore, if a shareholder owns 51% of the company's stake, he will have the right to exercise majority control over the company. Section 47 of the Company's Act 2013 bestows voting rights to the shareholders.

Ans : To ameliorate corporate governance and investment protection , the implementation of companies act, 2013 was a milestone in corporate reforms of India.  But there are also some difficulties and some amendments were required and thus pursuant to these repesentations, the ministry of corporate affairs constituted a company law committee for addressing these concerns.

Ans: The minimum number of partners are two. The maximum number of partners are 50. Companies Act, 2013( Section 464), Companies Miscellaneous) Rules, 2014( Rule 10) . All terms can be decided by the partners,  and in absence of any specific term the relevant sections of the Act will apply. Each partner is the agent of other partner and this relationship is called Principal Agent Relationship ( Joint and Several Liability).

Ans: Term is governed by the Agreement/ Deed. If silent,  it is 'partnership at will '. All terms can be decided by the partners,  and in absence of any specific term the relevant sections of the Act will apply.

Ans: The partnership firm is governed by Indian Partnership Act, 1932 and state rules.  The partners individually and collectively make firm. Generally in every act, the powers are given to make rules. In Indian Partnership Act, the power to make rules are given to state government. The parties in partnership firm are called the partners. Contract is essential and basis of a partnership firm.

Ans: Corporate personality is not a natural creation and is the creation of law of the country whereas the individuals who are  created by nature are also the legal persons. Company is also a legal person. In accordance with the law, a corporation is an artificial person which was created by the personification of a group of individuals. The theory of corporate personality mainly states  that a company has a legal identity which is different from its members. Both English law at the time of Britishers as well as Indian laws follow the concept of corporate personality. So far as legal persons are concerned, there are two kinds of legal persons: 1. Natural persons (Individuals) 2. Artificial persons (Corporations) The creditors are the persons who credit money to the company like shareholders as well as they are permitted to recover their money only from the company and the creditors can not sue or plead individual members. Similarly, the company is not liable to pa...

Ans: Difference between Company,  Sole Proprietorship and Partnership:  1. Company is a corporate body which can be public or private company having limited or unlimited liability. In Sole Proprietorship Business Organization, the only one person is the owner as well as the operator of the business. In Partnership business, there is an association of two or more people who agree to carry business as well as mutually share profits and losses. 2.The Governing act in Company law is Companies Act, 2013 whereas there is no governing act of Sole Proprietorship Firm. The Governing Act of  Partnership Firm is Indian Partnership Act, 1932. 3. So far as members are concerned in company, there are minimum 2 members and maximum 200 members in Private limited company whereas there are minimum seven members and maximum members are unlimited in public limited company.  There is only one member in sole proprietorship firm. There are minimum 2 members and maximum 100 members...

Ans: Hindu undivided family ( HUF ) is also known as Joint Hindu Family business is a type of family  business  which comprises of all persons  with " Karta " being the head of the family , whereas other family members are coparceners . It is governed by Hindu law. Karta manage all day to day affairs of the business .  There are usually two systems of HUF,namely Dayabhaga system : 1. In Dayabhaga System, Coparceners include both Male as well as female of the family . 2. The Mitakshara members includes only male members in the Hindu Undivided family business but this has been amended via the Hindu Succession Act , 1956 which provides equal rights to both male as well as female members. Features - 1. Hindu Undivided family business requires minimum two family members to form a HUF. 2. The members in the business of Hindu Undivided family will be admitted by birth only . Thus, Hindu Undivided family business includes minors too . 3. Unlike Karta , the liabi...

Ans: In simple words, it is one man business organization. All the assets of the business and profit generated out of business are owned by sole proprietor. The sole proprietorship is achieved under Shops and Establishments act , 1958 in Madhya Pradesh. The advantage of sole proprietorship is complete control and freedom to make quick decisions regarding the business. There is no sharing of profits. A significant disadvantage is unlimited liability. He can have access to limited capital. A single person can not be expert in every sector of business.  This leads to limited managerial liability. 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.

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...