Lab Companies Act

7/29/2019 Lab Companies Act

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Presentation by.. Neha..Himali..chintan..Raj..

HIRAL MAM ( LAB )


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Classification of Companies1. Chartered Company

2. Statutory Company

3. Registered Company


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Private CompanyMinimum capital of 1 lac or such higher capital

as may be prescribed and must

1. Prohibit invitation to public to subscribes for itsshares and debentures.

2. Restrict rights to transfer shares

3. Limit its employees to 504. Prohibit any invitation or acceptance of

deposits from persons other than its members.


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Public Company

A. Is not a Private company.

B. Has a minimum capital of 5 lacs rupees or suchhigher capital as may be prescribed.

C. Is a private company which is a subsidiary of acompany which is not a private company.


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Difference between Private and

Public Company

1. Minimum persons2. Maximum persons

3. Minimum capital requirement

4. Right to transfer shares


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5. Issue of prospectus6. Acceptance of deposits from public

7. Certificate required

8. Holding of meetings


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9. Written consent of directors10. Appointment of directors ( Resolution)

11. Retirement of directors

12. Addition in number of directors


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13. Forming of quorum14. Managerial remuneration

15. Privileges to private company

16. Issue of share warrants


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Special Privileges and Exemptions

available to private company

1. Only 2 members

2. No compulsion to minimum subscription3. Can allot shares without issuing prospectus

4. Freedom to issue new shares to outsiders


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5. Any kind of shares and disproportionatevoting rights

6. Certificate of commencement is notcompulsory

7. No index of members8. Holding of meeting is not compulsory


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9. Only 2 members can form the quorum

10. Polling arrangement

Less than 7 members by one person

More than 7 members by 2 persons

11. Minimum 2 directors12. Appointment of directors by single

resolution


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13. No written consent of directors required

14. Directors need not retire by rotation

15. No restriction on appointment or

advertisement of directors16. No notice is required in case of new

appointment of directors


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17. No restriction on managerial

remuneration

18. Direct and indirect financial assistance toits members for purchase or subscription of

its own shares19. Provisions of sec85 and 89 are notapplicable

20. Provisions of sec 108A are not applicable


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21. Provisions of general meetings are notapplicable

22. No inspection of books by third party

23. No written consent of directors required

24. May provide for additional disqualifications

for directors


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25. No restriction on power of board of directors

26. May provide special grounds for vacation ofoffice by directors

27. No restriction on provision of loan

28. A person in a private company can work as

MD for as many number of companies as helikes


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Types of Companies

Company Limited by Shares

Company Limited by Guarantee

Company Limited by Shares as well as Guarantee

Unlimited Company


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Private Company Deemed to be Public Company

Companies Act 1956 - Section 43A :

i. If 25% or more of its paid up share capital is held by a publiccompany or a deemed public co. EXCEPT where the saidpercentage is held by a public co. as a trustee orexecutor/administrator for any individual.

ii. If it holds 25% or more paid up share capital of a publiccompany

iii. Average annual turnover for last 3 FY is Rs 25 crores ormore

iv. If it invites, accepts or renews public deposits


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Private Company Deemed to be Public Company

Companies Amendment Act, 2000 Section 43A(11)

Section 43 (as discussed in previous slide) made inoperative

Companies Amendment Act, 2000 Section 3(1)(iii)Private company will be deemed to be public company if it invites, accepts orrenews public deposits

Companies Amendment Act, 2000 Section 43A(2A)

The department of Company is taking a view that by virtue of sub-section(11) all deemed public companies, existing on the date of the amendment,would have an option to revert to the status of a private company and inorder to facilitate this, sub-section (2A) has alone been made applicableafter the amendment. For this, the company has to inform ROC.


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Conversion of Private Company into a Public Company

Section 44 :

1) Special Resolution in General Meeting to alter AOA

2) Number of members & No. of directors

3) Name

4) Filing of Special Resolution & SLP to ROC


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Conversion of Public Company into a Private Company

No express provision in the Act

1) Special Resolution in General Meeting to alter AOA & include necessarylimitations

2) Name

3) Central Government approval

4) Filing of altered articles with ROC

5) Filing of Special Resolution with ROC


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Section 25 Companies

Formed for solely promoting art, commerce, science, literature, charity,religion; and other useful objects.

To be granted a license by the Central government recognized for suchpurpose.

Required to apply its profits only for promoting its objects and not forother purposes.

Prohibition on payment of dividend out of its profits to its members.

Examples :The Mica Chamber Of Commerce,Methodist Church Of India,Ravindranath Medical Foundation,WWF INDIA FOUNDATION


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Eligibility Criteria :

i. Sec 25 Companies can be either Private / Public Company having alimited liability.

ii. A license is required to be obtained from Central Government for thispurpose.

iii. Deletion of words private limited or limited from its name


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Privileges & Advantages of Sec 25 Companies A partnership firm is allowed to be its members, but on the dissolution of the

firm, its membership of the association or company shall cease. No Minimum requirement of share capital in comparison to other Companies. Required to maintain books of accounts only for 4 years (normally 8 yrs). Can increase the no. of directors without obtaining prior permission from Central

Government. Free to determine & hold the time, place & date of Annual General Meeting. Notice for AGM to be given for short period of 14 days only (normally 21 days). Board meetings to be held only once in every 6 months but should held 4 meetings

in a year. Exempt from applicability of CARO (Companies Auditors Report Order). Low fees are required to be paid in comparison to other Companies for

registration. At present Rs. 50 is required to be paid. Not require to stamp their Memorandum & Articles of Association. Publication of Name:

A section 25 company has been exempted from the provisions of section 147 andas such is not required to mention its name and address as required in case of allother companies.


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Disadvantages or Obligations of Sec 25 Companies

Ensure that the profits or other incomes are applied for promoting the objects only. Cannot alter its objects clause in the Memorandum without taking prior written approval of

central Government. If the Central Government has imposed some conditions and regulations upon the company for

granting a licence under section 25 then such a company is bound by such conditions and has toensure adequate compliance with them. Where such conditions and regulations have been

imposed then such conditions and regulations are required to be included in the Articlesor/and memorandum of the company as may be directed by the government. Ensure that profits are not distributed as dividends to its members. Section 25 Company is regarded as a company within the meaning of the Income Tax Act,

1961 and as such its income is taxable according to the applicable rates similar to thoseapplying to other companies.

Revocation of license

The Central Government after giving reasonable opportunity of hearing can revoke the license bypassing a speaking order. The license may at any time be revoked by the Central Government, andupon revocation, the Registrar shall enter the word" Limited" or the words" Private Limited" atthe end of the name upon the register of the body to which it was granted; and the body shallcease to enjoy the exemption granted by this section: Provided that, before a license is sorevoked, the Central Government shall give notice in writing of its intention to the body, and shallafford it an opportunity of being heard in opposition to the revocation.


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Government

company


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According to Section 617 of the IndianCompanies Act 1956, a Government

company means, "any company in which

not less than 51percent of the sharecapital is held by the Central Government or

any State Government or partly by the

Central Government and partly by one ormore State Governments".


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Features of Government Companies:

(1) Formation: Government company is formed & registered underIndian Companies Act, 1956, either as a Private company or Public

company.

(2) Ownership: It may be partly or wholly owned by Government.State Government or Central Government or both may own theGovernment Company. If it is partly owned by Government then atleast 51% of the capital must be taken over by the government.

(3) Management: Management of Government company is vestedin the hands of Board of Directors. The Directors may be nominatedby government or even the shareholders can appoint the Board ofDirectors.

(4) Separate Legal Status: A Government company, like a joint stock

company is an incorporated association & artificial person having acommon seal & perpetual succession. It has a separate legal entityfrom its owners.


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(5) Body Corporate: A Government company is incorporated underthe Indian Companies Act, 1956. It enjoys the status of bodycorporate. "It can enter into contract in its own name & can acquireproperties in its own name. It can sue & can sued by others.

(6) Employees: The employees & other staff members in governmentcompany are appointed by the company itself. The employees areneither government servants nor they work under civil servants;the government may in exceptional cases nominate some topexecutives.

(8) Approval of Accounts: Government company has to place itsAnnual Accounts & Annual Reports for the approval of LegislatureAssembly or Parliament as it is compulsory as per the act.

(9) Flexibility: A government company enjoys full flexibility in itsoperations. It is free to adopt different changing policies accordingto changing business environment.

(10) Exemptions: A government company is exempted fromBudgetary Accounting & Audit. But, its Auditors are appointed bythe government as per the guidance of controller & Auditor Generalof India


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foreign company


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Under Indiancompanies Act

1956

Liaison office or

project office it has

to comply with some

other provisions.

Section 591 to 608 of

companies' Act


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FOREIGN COMPANIES UNDER INDIAN COMPANIES ACT, 1956

Section 591 to 608 of the companies act, 1956 containsthe provisions related to the entities incorporated

outside India or foreign companies. Sections 591 say

that sections 592 to 608 shall apply to all foreign

companies. These sections put an obligation upon theforeign companies to submit their information's to the

registrar of companies regarding like accounting

information, registration of charges on properties held

by it in India, etc.


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DEFINITION OF FOREIGN

COMPNY.. .


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According to section 591 foreign companies are the:

(a) Companies incorporated outside India which,after the commencement of this Act, establish a

place of business within India; and

(b) Companies incorporated outside India which

have, before the commencement of this Act,established a place of business within India and

continue to have an established place of business

within India at the commencement of this Act.

A place of business means premises where there is

a physical or visible indication that the company

may be contacted there.


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It is necessary to mention here that a foreign company is

different from a foreign controlled company. Accordingto RBI a company could be treated as a foreign

controlled company if , (a) 40 per cent or more of its

shares were owned in any one country outside India, (b)

it was a subsidiary to a parent company in any countryregistered abroad, (c) 25 per cent or more of its shares

were owned by a foreign-controlled Indian Joint Stock

Company, which was not a managing agent, and (d) it

was a company managed by a foreign-controlled

managing agency company.

A foreign company of which more than 50% paid up

capital is held by Indian citizen or bodies corporate

would attract more provisions.


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LIMITED LIMITED LIABILITY

PARTNERSHIP


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A limited liability partnership (LLP) is a partnership in

which some or all partners (depending on thejurisdiction) have limited liabilities. It thereforeexhibits elements ofpartnerships and corporations.

In an LLP, one partner is not responsible or liable foranother partner's misconduct or negligence. This is animportant difference from the traditional unlimitedpartnership under the Partnership Act 1890, in whicheach partner hasjoint and several liability.
http://en.wikipedia.org/wiki/Partnershiphttp://en.wikipedia.org/wiki/Corporationhttp://en.wikipedia.org/wiki/Partnershiphttp://en.wikipedia.org/wiki/Corporationhttp://en.wikipedia.org/wiki/Partnership_Act_1890http://en.wikipedia.org/wiki/Joint_and_several_liabilityhttp://en.wikipedia.org/wiki/Joint_and_several_liabilityhttp://en.wikipedia.org/wiki/Partnership_Act_1890http://en.wikipedia.org/wiki/Joint_and_several_liabilityhttp://en.wikipedia.org/wiki/Joint_and_several_liabilityhttp://en.wikipedia.org/wiki/Partnership_Act_1890http://en.wikipedia.org/wiki/Corporationhttp://en.wikipedia.org/wiki/Partnership


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Features


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Limited liability of partners.

Body corporate with perpetual succession

( Continuous corporation ).

Minimum 2 partners without any ceilingon maximum number.

Very simple registration formalitiesDetailed LLP Agreement is notmandatory but if not done, certain

inherent provisions will apply viz.equal share in profit/loss, noremuneration can be paid topartners.


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Acts of one partner will not be

binding on other partners. They bindonly to the LLP.

Liability of LLP must be met out ofproperty of LLP only. The LLP Act2008 is to come into force from 1-4-2009. This date is not notified yet.


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THANK

YOU

Documents

Lab Companies Act