Copy of Indian Companies Act 1956

7/29/2019 Copy of Indian Companies Act 1956

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Indian companies Act 1956


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Meaning of the company

It is an artificial person created by law,

formed for the purpose of business,

registered under law having anindependent legal entity, a distinctive

name, common seal and perpetual

succession


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MEMORANDUM OF

ASSOCIATION

Document that governs the relationship

between the company and the outside world. MOA is one of the core documents which has to

be filed with the registrar of companies at thetime of incorporation. It sets out the constitutionof the company. A company cannot depart fromthe provisions contained in its memoradum,if itdoes it would be considered ultra vires and

therefore void MOA is a public document and can be

inspected by everybody


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CONTENTS OF MOA

Name clause

Governed by Emblems and Names Act 1950

Seal to be present on all business letters,

notices etc

Registered Office Clause

Ascertains domicile and nationality of a company


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CONT..

Objects Clause

Explains the utilization of shareholders funds

Enables the person dealing with the company to

ascertain its powers

Liability ClauseIt states the liability of the members of the

company is limited


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CONT..

Capital Clause

It must state the authorized of nominal share

capital

Association or Subscription

Clause

It specifies the willingness of the subscribers toassociate and form a company


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Alteration of the Memorandum

Change of name

Change of registered office

Change of the Objects clause

To carry on its business moreeconomically

To attain its main object by new or

improved means

To enlarge or change the local area of its

operation


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Cont..

To restrict or to abandon any of the objects specifiedin the memorandum

To sell or dispose of the whole or any part of the

undertaking of the company

To amalgamate with any other company or body of

persons


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Articles of Association

Meaning and purpose:

Articles of Association of a company and its bye laws are regulations

which govern the management of its internal affairs and the conduct

of its business.

They define the duties, rights, powers and authority of the

shareholders and the directors in their respective capacities and of

the company is to be carried out.

They are framed with the object of carrying out the aims & objects as

set out in the memorandum of association


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Cont..

The articles of association of a company have acontractual force between the members inter se inrelation to their rights as such members.

Articles cannot supersede the objects as setout in

the memorandum of association. The articles must be:

(i) printed,

(ii) divided into paragraphs, numberedconsecutively,

(iii) signed by subscribers to the memorandum in thepresence of at least one witness who shall attest thesignatures. Also, articles are to be stamped withrequisite stamp and filed along with the

memorandum


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Contents of Articles

1. The business of the company;

2. The amount of capital issued and the classes ofshares into which the capital is divided, theincrease and reduction of share capital;

3. The rights of each class of shareholders and theprocedure for variation of their rights;

4. The allotment of shares; calls and forfeiture ofshares for non-payment of calls;

5. Transfer and transmission of shares;


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CONT..

7. Exercise of borrowing powers including issue ofdebentures;

8. General meetings, notices, quorum, proxy, poll,voting, resolution, minutes;

9. Number, appointment and powers of directors;

10. Keeping of books both statutory and others


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Alteration of articles

Section 31 provides that subject to the

provisions of the Act and to the conditions

contained in its memorandum, a company

may, by special resolution alter or add toits articles must be filed with the Registrar

within 30 days of the passing of the

special resolution.


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Formation of Company

Incorporation of a company

Availability of name

Minimum Paid-up capital

Documents to be filed with the Registrar

Memorandum of Association

Articles of Association

The agreement if any

Certification of Incorporation


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Cont..

5. There cannot be alteration of thearticles so as to compel the existingmembers to take or subscribe for more

shares or in any way to contribute to theshare capital, unless they given theirconsent in writing

6. The amended regulation in the Articlesof Association cannot operateretrospectively, but only from the dateof amendment


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Meetings & Proceedings

An occasion when people come

together to discuss or decide something


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Meetings of share holders

Statutory meeting Section 165)

Statutory meeting is the first meeting of the shareholdersof a company. This meeting is held only once in the life timeof the company.

Objectives: To approve the preliminary contracts specified in the

prospectus of the company with modification if any.

To discuss the success of floating the project of thecompany.

Provisions:1.Time: Every company , shall , within a period of not less

than ONE month and not more than SIX months from thedate on which the company is entitled to commence thebusiness, hold the Statutory meeting


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Cont..

Notice: The company must give notice to its member atleast 21 clear days before holding the statutory meetingstating time, date and place of meeting.

3. Statutory Report: The Directors of the co., are requiredto send a report called statutory report to every member

of the company along with the notice of the meeting atleast 21 days before the date of the meeting.

CONTENTS:

Allotment of Shares: The total number of shareallotted, distinguishing fully paid or partly paid up and theextent to which they are so paid up, shares issuedotherwise than for cash.

Cash Received: Total amount of cash received by thecompany in respect of all the shares allotted.

Abstract of Receipt and Payment Account


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CONT..

Names, addresses and occupations of the companys Directors,Auditors and all other managerial personnel.

To approve the preliminary contracts specified in theprospectus of the company with modification if any.

The extent to which the Underwriting Contracts has beencarried out and the reasons thereof.

The calls in arrears, if any, due from any Director and theManagers of the co.

Commission and brokerage paid to any Director orManager on the issue of shares or debentures of thecompany.

4.Certification of Statutory report: By not less than two

directors , one of whom shall be the Managing Director.The Auditor of the co shall certify the particularsregarding the issue of shares, receipts and payment etc.And a copy of certified statutory report must be sent tothe Registrar of company immediately after it is sent tothe members of the company.


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ANNUAL GENERAL MEETING (SECTION 166)

Objectives:1. Presentation of Annual Accounts for the Approval.

2. Declaration of Dividend

3. Appointment of Auditors

4. Appointment of Directors in place of retiring by rotation.

5. Special Business

Provisions:First Annual General Meeting of the co should be held within a maximumperiod of 18 Months from the date of its incorporation

Subsequent AGM: There cannot be a gap more than 15 months between

the dates of two AGMs.

Shree meenakshi mills Co ltd case: Delay in the completion of audit of the

annul accounts of a company does not constitute a special reason for delaPower to convene the AGM: Only Board of Directors of the company

has to power to convene AGM of the company

Notice: Atleast 21 days prior notice must be sent to all the member of the

company. However, if all the members having the voting rights gives their

consent, the meeting can be called at a shorter notice.

Date, Time and Place of holding AGM:


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Cont..

Postponement: where an AGM is convened for a particular date andnotice is issued to the members, the Board of Directors may cancel orpostpone an AGM provided that it is being done for bonafide reasons.

Adjournment: An AGM can be adjourned by chairman for bonafidereasons only. Where a meeting is adjourned, the adjourned meeting

shall be held on the same day next week at the same place at thesame time.

Where a company fails to hold its AGM within the prescribed period oftime, The National Tribunal on the application of any member, mayeither call or direct the co to call its AGM.

Even when the Annual Accounts are not ready, co should held AGM to

transact all other business and then to adjourn the meeting to somefuture date when the accounts will be ready for shareholders approval.


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Cont..

Extraordinary meetings: held between two

consecutive AGMs for transacting some

urgent or special business

Class meeting:

Generally held for obtaining the consent of

a particular class of shareholders for

altering their rights and privileges or for the

conversion of one class to another


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Resolutions

Decisions of the company are made by resolutions of itsmembers, passed at meetings of members

A proposal when passed & accepted by the membersbecomes resolutions.

A motion proposed by the chairman of themeeting/any other member . After discussions put to vote,final result accepted becomes Resolutions.

Kinds of resolutions; Ordinary resolution[sec.189(1)]..,Special resolution[sec189(2)].., Resolutions requiringspecial notice[sec190].


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When is an Ordinary resolutions required

Is passed in a general meeting by a simple majority ofvotes. Votes cast in person and required notice ofresolution duly given.

It is required for.., matters concerning with NameClause, Capital Clause.., for appointing auditors andfixation of their remuneration., appointing of firstdirectors who are liable to retire by rotation.., forincreasing/decreasing in number of directors..,

appointment of managing director, removal of a director, for winding up of a company voluntarily in certainevents, appointing and fixing of remuneration ofliquidators


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Special resolutions

Is required for changing the place of registered officefrom one state to another.., for alterations of Objectsclause,omission/addition of private from name..,alteration of Articles.., conversion of any portionuncalled capital into reserved capital..,

for payment of interest out of capital.., applying toCentral Govt for an inspector to investigate in companyaffairs.., for applying in court to wind up.,

for authorizing a liquidator to accept shares asconsideration for transfer of its assets.., and for

disposal of books and papers of a company in voluntarywinding up after completion of the process.


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Resolutions requiring special notice

Its only a different kind of ordinary resolutions of whichnotice of the intention to move a resolution has to be given.

Notice shall be given not less than 14days before the meeting

to the members as notice of meeting is given/by advertisementin any newspaper.

Is required for appointment of an auditor other than retiringones.., to re-appoint the retiring auditor, for removal of adirector before expiry of his period.., for appointment of adirector in place of who is removed.


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Winding up of companies

Types of Winding up of

companies1. Compulsory winding up by the tribunal

initiated by petition to the tribunal

2. Voluntary winding up initiated by

resolution of the company in generalmeeting.

a. Members voluntary winding up

b. Creditors voluntary winding up


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Winding up of Companies

Compulsory winding up by the

tribunal initiated by petition to thetribunal

Tribunal means the National

Company Law Appellate


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CIRCUMSTANCES FOR WINDING

UP

ON PASSING OF A SPECIAL RESOLUTION.

FAILURE TO HOLD STATUTORY MEETING.

FAILURE OF THE COMPANY TO COMMENCE

BUSINESS.

REDUCTION IN NUMBER OF MEMBERS BELOW

MINIMUM.


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Cont..

COMPANY ACTING AGAINST THE

INTEREST OF SOVEREIGNTY AND

INTEGRITY OF INDIA.

WHEN SICK INDUSTRIAL COMPANY IS

UNABLE TO MAKE ITS NETWORTH

EXCEED ITS ACCUMULATED LOSSESWITHIN A REASONABLE TIME.


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WHO CAN FILE WINDING UP

PETITION?

COMPANY

CREDITORS

CONTRIBUTORY

REGISTRAR OF COMPANIES

CENTRAL GOVERNMENT


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WHO CAN BE APPOINTED AS

OFFICIAL LIQUIDATOR A MEMBER FROM THE PANEL OF THE PROFESSIONAL

FIRMS OF CHARTERED ACCOUNTANTS, ADVOCATES,COMPANY SECRETARIES, COST AND WORKACCOUNTANTS WHICH THE CENTRAL GOVERNMENTMAY CONSTITUTE.

BODY CORPORATE APPROVED BY CENTRALGOVERNMENT.

WHOLE-TIME OR PART-TIME OFFICER APPOINTED BYTHE CENTRAL GOVERNMENT.


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DUTIES OF LIQUIDATOR

To submit preliminary report

To takeover companys assets

To convene meetings of creditors and

contributories To keep proper books

To submit accounts

To submit information in pendingliquidation


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POWERS OF LIQUIDATOR

To be exercised by sanction of court ( 457.1)

Institute and defend suits, prosecutions in the name and onbehalf of the company

Carry on business for the beneficial winding up

Sell movable & immovable property by public action or privatecontract

Raise money on the security of any asset of the company

Do all other acts necessary to wind up & to distribute assets


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Cont..

To be exercise without the sanction of thecourt(457.2)

Do all acts & execute in the name of the company alldeeds, receipts and documents

Inspect records & returns on the files of the Registrar

Draw, accept, make & endorse bill of exchange

To appoint agents where necessary


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VOLUNTARY WINDING UP

MEMBERS VOLUNTARY WINDING UP.

CREDITORS VOLUNTARY WINDING UP.