KINDS or TYPES OF COMPANIES
1) According
to mode of incorporation
1. Under the special Act of Legislature : Incorporated under
the special Act of central or state legislature called ‘Statutory Companies’
such as LIC, RBI, UTI etc.
2. Under the
Companies Act. : Known as
‘Registered Companies.’
2) On
the basis of number of its members
1. Private Company
Section 3 (1)(iii) A Company which
satisfies the following conditions
·
Minimum paid up capital =1 lakh or as prescribed
·
Restriction on transferability of shares= some restrictions
in a Company limited by shares in the right of transferability of shares in the
Company
·
Restriction on number of members= limited to 50 except
persons who are/ were in employment of Company and were members of Company
during employment and continued to be members after employment ceased. Joint
holders of shares be treated as single member for the purpose.
·
Prohibition on issue of Prospectus= prohibits any invitation
to public to subscribe for any shares/ debentures of the Company. Prohibitions on
any invitation or acceptance of deposits from persons other than members,
directors or their relatives.
·
Minimum number of members = 2
·
A private Company must add the word ‘Private’ or any
abbreviation thereof in its name.
A private Company limited
by shares must have articles containing aforesaid restrictions, limitations and
prohibitions.
2. Public Company Section
3(1)(iv) : A Company which
·
Is not a private Company
·
Has minimum paid up capital of Rs 5 lakhs or as prescribed
·
Is a private Company which is a subsidiary of a Company other
than a private Company
·
Maximum number of members =7
3) On
the basis of liability of members
1. Company limited
by shares
A Company having liability of its members
limited by the memorandum to the amount, if any, unpaid on shares held by them
is termed as a Company limited by shares. Most Companies in India are of this
type.
2. Company limited
by guarantee
A Company having liability
of its members limited by memorandum to the amount members undertake to contribute
to the assets of Company ‘during winding up’ is termed as Company limited by
guarantee. The articles shall state the number of members with which the
Company is to be registered.
3. Unlimited
Company
A Company not having any
limit on liability of its members is termed as unlimited Company. The articles
shall state the number of members with which the Company is to be registered and
in case of Company having share capital, the amount of share capital. Such
Companies are rare these days.
4) Un-registered
Companies
It includes partnerships,
association of persons or Companies consisting of more than 7 members at the
time of winding up petition.
5) Foreign
Companies (Section 591)
A Company incorporated
outside India which has ‘a place of business in India’. The terms place of
business has been judicially construed. The test is to ascertain whether
business is carried on here at a defined place.
Case Law: Pratap Singh V/s
bank of America ( Bom HC)
Held= A foreign Company
cannot be sued in India for a cause of action arisen wholly outside India, even
if it has a place of business in India.
Babulal Chowkhani V/s
Caltex (India) limited (Cal HC)
Held= Any failure by a
foreign Company to comply with the provision of part XI of the Companies Act
shall not affect the validity of any contract/ dealing/ transaction entered
into by the Company.
Documents to be delivered
by the foreign Company
a.
Certified copy of charter, status, memorandum and articles , and other relevant instrument defining
the constitution of Company. If not in English, certified translation there4of.
b.
Full address of registered and principal office of Company
c.
List of directors and secretary of Company with particulars
d.
Name and address of persons resident in India authorized to
accept on behalf of the Company service of process/ notices / other documents.
e.
Full address of office of Company deemed to be the principal
place of business in India.
S. 593 = Any alteration in
the above particulars must be notified to the registrar within the prescribed
time.
S. 594 = Accounts of
foreign Company : Copies of Balance sheet/ P& L A/c and other documents
required under the Act along with list of all places of business established in
India
S. 598= Penalties and
disability – fine up to Rs. 10,000
In case of continuing
offence, additional fine up to Rs. 100 per day during which default continues.
S. 599= Company prohibited
from enforcing any contract by way of suit, set off or counter claim. The
section does not create a right to sue a foreign Company nor does it extinguish
or limit such right.
6) Government
Companies
Any Company in which not
less than 51 % pf paid up share capital is held by the central government or
state government/s or partly by central government and partly by one or more
state governments and includes a subsidiary Company of a government Company. The govt. co. is not a department or
extension of the State.
Special provisions
relating to Government Companies:
·
Audit: S. 619- Auditor
appointed/ reappointed by CAG. Report to CAG who shall have to comment upon or
supplement it.
·
Annual reports S 619 A- Govt. Company shall cause an annual
report on working of affairs of Company within three months of AGM.
The annual reports be laid before
both houses of parliament or State legislature, as the case may be. With a copy of audit report and comments or
supplements thereto made by the CAG.
Application of Company’s Act: Govt
Company to be registered under the Company’s Act. The Govt by notification in
the Official Gazette direct that any provision of the ACT shall 1) not applied
to Govt Company 2) Apply with exceptions, modifications and adaptations
specified in the notifications.
7) Holding Company and Subsidiary
Company : Sec 4(4)
4(1): The company which controls the composition of BOD is called the
holding Company and the other Company is called the subsidiary Company .4(2):
the composition of Company’s BOD shall
be deemed to be controlled by another Company if that Company can appoint or
move or majority of directorship without consent or concurrence.
Wherein Company holds
majority of shares in another Company, the former is holding Company and latter
subsidiary.
A subsidiary Company of
another which itself is subsidiary of another company. The former shall be the
subsidiary of latter Company .
Advantages of private
Company :
1) Number of members minimum
two.
2) Provisions relating to
prospectus not applicable
3) Minimum subscriptions not required
4) No need of a
certificate of commencement of business.
5) Exemptions relating to
directors.
·
Only two directors
·
Directors need not retire by rotation.
·
Fourteen days notice for appointment of new director not
applicable
·
Sec 259 not applicable unless it is a subsidiary Company of
public Company
·
Requirement of written consent of first appointment of
director to act as such within 30 days of appointment not applicable, unless
subsidiary of public Company .
·
Interested director of Private Company, which neither a
subsidiary nor a holding Company can participate and vote in boards
proceedings.
6) No need of holding statuary meeting and file a statuary
report.
7) Further issue of capital to outsiders who are not
members
8) Sec 416 does not apply.
9) Disclosure of interest:
Interested director under no obligation to retire from meeting of board at
which matter of his interest discussed. He
can participate and exercise his vote.
Disadvantages of private Company :
1) Cant issue share warrants payable bearer.
2) Sec 159 to file annual
list of members and summary with a registrar. Also to send a certificate to the
effect that Company has not since date of last return issued any invitation to
public to subscribe to shares of debentures.
3) A member of private
Company cannot appoint more than one proxy to attend and vote in Company
meeting.
4) To send as certificate
to registrar to the effect that
a) Its annual turnover in preceding three
years never reached one crore.
b)
It did not hold 25% or more of paid up capital of one or more public Companies.
c) Since its last GM capital no body corporate
has held 25% or more of its paid up share capital.
Failing which it shall cease to be a private
company forth with.
8) Investment Company : Proviso to sec 372 (1) A
Company whose principle business is accusation shares , stock, debentures or
other securities
Whether
a Company is investment Company or not is a question of fact which has to be
decided in narration to actual business transacted by the Company .
The
term whose principle business is acquisition of shares implies that the
Company’s expected to hold shares etc acquired by it for a reasonable time.
9) Finance Company : A non-banking Co. which is
a financial institution within the meaning of S.45(1)(c) of RBI Act 1934. Thus
a financial institution is a non
banking institution which carries on any of the following activities as its
business or part of its business.
·
Financing, by making loans advances or otherwise.
·
Acquisition of shares, stocks, debentures or securities
issued by govt. or local authority or other marketable securities of similar
nature.
·
Carrying any insurance business.
·
Managing conducting or supervising agency of chits etc under
the law in force.
·
Collecting money by subscription or sale of units or awarding
prices gifts whether in cash or kind. According to Sec 4(a) of Company Act
following are regarded as public financial institutions. ICICI, IFCI, IDBI,
LIC, UTI.
·
Central Govt. by notification in official gazette specify any
other institution to be public financial institution provided a) Constituted by
or under central govt. Act be not less than 51% of its share capital held or
controlled by central govt.
CHARITABLE CONTRIBUTIONS
Political Contributions :
DIVIDEND
BORROWING POWER OF COMPANY DEBENTURE AND CHARGE
Allotment of shares
LAW OF PROSPECTUS IN COMPANY LAW
Relationship between MOA and AOA.
DOCTRINE OF ULTRA VIRES
CONVERSION OF PRIVATE Company TO PUBLIC Company
KINDS OR TYPES OF COMPANIES
COMPANY LAW:-Characteristics of Company
