company law PPT

Corporate and Securities
Law
Adv. Ambari Patwardhan
Introduction
 Company as a form of business
organization
 People with same objects and goals
may come together
Objects of Companies Act
2013
 To protect the interest of shareholders
 To safeguard the interest of creditiors
 To ensure proper administration and
transparency
 To encourage investment and prevent
malpractices
 Simplified process to form a company
 To allow for investigation
Companies Act in Banking
& Insurance Sector
 Most of the banks and Insurance

companies are registered as
companies under companies Act.
 The Act also applies to insurance sector
Sec 1 (4)
 Companies incorporated under this or
any previous law
 insurance companies and provisions of
insurance Act
 Banking companies and Banking and
Regulatory Act
 Electricity generation and supply
 Any other companies governed under
the provisions of Special Act
Exceptions
Some provisions of Companies Act ,

which are not applicable to banking
and insurance sector
 Sec 67- Restriction on purchase by
company or giving of loans by it for
purchase of its shares
 Section 73 - Acceptance of Deposite
by companies
 Sec 129 – financial statement
 Sec 179- powers of the board
 Sec 180- Restriction on powers of
board
 Sec 186- loan and investment by
company
Features of company
 Sec 2(20) A company is defined as
compani incorporated under company
Act
 1. Voluntary association
 2. Compulsory registration
 3. Separate legal entity - Salman Vs
saloman
 Limited liability
 Separate property
 Common seal
 Perpetual succession
Introduction
 Sec 3 to 22 of the company Act and the
companies incorporation rules 2014
deals with formation of the company
 Formation of the company
- For private company we require 2
members
- For public company we need 7 persons
to form a company
Steps for formation
1. Application for availability of name -
- The name should be as per the rule 8 of
incorporation rules 2014
- The proposed name should not be too
resembling or identical to any other company
2. Directors identification number-
- The proposed directors identification number is
necessary and that should be obtained form ROC
- This number must be mentioned in registration
process of company
- Digital signature must be obtained
Documents to be filed with
ROC
 MOA and AOA with stamp duty and filling
fees
 Declaration b H.C or S.C advocate/ CA/CS
 Affidavit from each subscriber of
memorandum and first directors
 Complete Prescribed details of first directors
and subscribers
 Correspondence address till registered office
is established
 ROC issues an “Incorporation Certificate”
and company gets it’s separate legal identity
Memorandum of
Association
 What is MoA and AoA?

 MoA is an abbreviation for Memorandum of Association,
 AND
 AoA stands for Articles of Association.
 They safeguard and structure your business, helping in

establishing the company’s identity, working
methodology, and goal.
 Memorandum of Association (MOA) is a
document that contains all the
fundamental data which are required
for the company incorporation.
 Articles of Association (AOA) is a

document containing all the rules and
regulations that govern the company.
Articles of Association (AOA)
 The Articles of Association (AOA) is to draft the
rules and regulations that the company has to
follow and the layout of the internal management
of the Company.
 Allocation of shares and the manner that how
shares have to be handled
 Voting rights of members

 List of Intellectual Property Rights

 Procedure to elect the Chairman and his votin
List of Directors, including first of
directors or directors for life, their
appointment, remuneration,
qualifications, powers, and proceedings of
Board of Directors’ meetings
Dividends and reserves (Dividing the
profits)
 Alteration in Capital
 General Meetings and proceeding at
General Meetings

 Board of Directors and their powers

 How accounts and Audits will be managed
 Borrowing Powers

 How the Company can be dissolved
 Name Clause – Any company cannot register
with a name that CG may think unfit and also
with a name that too nearly resembles the
name of any other company.

 Situation Clause/ registered office clause –
Every company must specify the name of the
state in which the registered office of the
company is located.

 Object Clause – Main objects and auxiliary
objects of the company.
 Liability Clause – Details regarding the liabilities of
the members of the company.

 Capital Clause – The total capital of the company.
 This clause specifies the maximum amount of capital
a company can raise along with its distribution into
shares. The company can only secure a specified
capital amount mentioned in this clause. Any special
rights or privileges are given to shareholders are
mentioned here

 Subscription Clause – Details of subscribers, shares
taken by them, witnesses, etc.
 ultra vires –
 beyond the legal power or authority of a person or
official or body etc; "an ultra vires contract“
 The Doctrine of Ultra Vires is a fundamental rule
of Company Law.
Hence, if the company does an act, or enters into a

contract beyond the powers of the directors and/or
the company itself, then the said act/contract is void
and not legally binding on the company.
 The term Ultra Vires means ‘Beyond Powers’.

 An act, legal in itself, but not authorized
by the object clause of the Memorandum
of Association of a company or statute,
is Ultra Vires the company. Hence, it is
null and void.
 An act ultra vires the company cannot

be ratified even by the unanimous
consent of all shareholders.
 If an act is ultra vires the directors of a
company, but intra vires the company
itself, then the members of the
company can pass a resolution to ratify
it.

 If an act is Ultra Vires the Articles of
Association of a company, then the
same can be ratified by a special
resolution at a general meeting
Alteration of Articles
 Special resolution in general meeting
 Copy must be filed registrar with 15
Alteration of article within the limit of

company Act
- Beyond the provisions of companies
Act 2013
- Beyond the MOA
Prevention of operession
and mismanagement
 Rule in Foss Vs Harbottle
 Facts of the case-
- Here 2 shareholders of a company filed

a case against the directors and
promoters of the company , alleging
that they had misapplied the company
assets and had improperly mortgaged
the company property
 It was held that –
Court rejected the application of these
two shareholders and stated that
directors have done breach of duty to
company, so company can only sue
them .
 Rule is derived from 2 general
principals of company law
1. Company is a legal entity
2. Court will not interfere with the
internal management of companies
acting within powers.
Grounds on which
complaint can be filed
 A member of a company may apply to
NCLT in following situations
(a) Company affairs are being conducted
in a manner prejudicial to public
interest
(b) Material change in the management or
control of the company which may
affect the conduct or affairs of the
company
Who can apply ?
 If company is having a share capital –
- Minimum one hundred members of the
company or minimum one-tenth of the
total member, whichever is less
- Any member holding not less then one-
tenth of the issued share capital
- But there is a condition – the applicant
should have paid all calls for the sums
due to his shares
Punishment
 Fine minimum one lakh rupees, which
may extend to 25 lakh rupees
 Every officer who is in default will be
punishable with imprisonment upto 6
months
Thank You !!

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company law PPT

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Corporate and Securities

 Most of the banks and Insurance

Some provisions of Companies Act ,

 AoA stands for Articles of Association.

 They safeguard and structure your business, helping in

 Articles of Association (AOA) is a

Hence, if the company does an act, or enters into a

 The term Ultra Vires means ‘Beyond Powers’.

 An act ultra vires the company cannot

Alteration of article within the limit of

- Here 2 shareholders of a company filed

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