Company Law

Characteristics of company distinction between company and partnership,

What is a company? a company means a company formed and registered under companys Act or any other previous law According to Prof Heney a co is an artificial person created by law, having separate entity, with perpetual succession and a common seal Partnership

Partnership is relation between persons who have agreed to share profits of a business carried on by all or any of them acting for all. Existence of agreement, sharing of profits of business and mutual agency between partners are the essential features of a partnership. Registration of partnership firm is not necessary but in case of co it comes into being only after it ha s been registered under cos Act

Characteristics of a company
Incorporated association Separate and Legal entity Limited Liability Common Seal Voluntary association for Profit Perpetual life Separate ownership and management Transferability of shares Termination of existence Representative management

Difference between Partnership and Company Regulating law A company is registered under The Companies Act, 1956, where as Partnership Firm is registered under Indian Partnership Act,1932.Registeration of partnership firm is not a legal necessity. Mode of creation-A co comes into existence after it is registered under Company Act while a partnership comes into being after an agreement. Members-Minimum number of members in a partnership as well as in a private limited company is Two while in public limited company it is seven. The maximum number of members in a partnership is 10 in case of banking business and 20 in non banking business.

 In case of partnership the members forming partnership are called partners while in case of co-ownership they are called co owners. A partner can not transfer his share to a stranger without the consent of other partners while in case of co-ownership it can be done. A partner can not seek partition of property but he can sue other partners for dissolution and for accounts. In the case of coownership a co-owner can seek partition of the property. A co-owner has no lien on the property jointly held for the expenses incurred by him for the jointly held company where as it can be done in the case of partnership lien on property for expenses incurred by him on behalf of the firm. There is no limit on membership numbers but in case of partnership in banking the maximum number is 10 and others it is 20 , while the minimum is 2.

 Mode of creation Registered/ Agreement Membership-minimum- 2/2/7 Legal status-Not distinct from members/Separate legal entity-contract, in co member can not act as agent but a partner can, member of co not personally liable but in partnership creditor can proceed against partners. Liability of members-Limited up to share or guarantee In partnership it is unlimited

 Transfer of shares- co share can but, in partnership it can only be done with the consent of other members Agency of members-A share holder is not an agent but a partner is Management- co is managed by directors who are elected, appointed and removed by shareholders in a general meeting Perpetual Succession, in partnership the firm is dissolved in case of insolvency, death etc Powers-The power of a co are limited by object clause of MOA. Restriction of powers-In Memorandum of Association is a public document and public is bound to acquaint themselves, in partnership it is not binding on public. Dissolution -dissolved on the orders of the court or voluntarily by members. Partnership by agreement Legal Obligation- Bound by Companies Act not so in case of partnership

Differences between Partnership and Co-ownership

Section 5 lays down that the relation of partnership arises from contract and not from status; and in particular, the members of a Hindu undivided family carrying on a family business as such are not partners in such business Some of the differences are given below: Partnership is creation of an agreement where as in case of co ownership may or may not be out come of agreement. A co-ownership may or may not involve business. In case of partnership it is a relationship of mutual agency while it is not so in case of co- ownership.

 Characteristics of company, distinction between company and partnership, Kinds and formation of company, memorandum and articles of association.

 Body corporate The term body corporate has wider application as compared to company. It also includes corporations formed under Acts of parliament, but does not include a corporation sole; a co- operative society registered under cooperative societys Act, any other body corporate not defined as co under the Act. It not only refers to companies registered in India but also foreign companies and other foreign bodies. The members of body corporate need not be individuals , other body corporate could be its members

Types of companies
Charter co- incorporated under special charter by king or queen East India co Bank of England Statutory coIncorporated under special Act of parliament RBI ,LIC,UTI,FCI- Constitution, powers and scope of its activities-No MOA or AOA. Only Acts which constitute them change through legislative amendment Formed for carrying on the work of special public interest. Registered co-Registered u ICA,1956 it comes into action once certificate of incorporation is issued by registrar of companies. Drives power from ICA and MOA . It could be either Private or Public limited Limited by share- up to unpaid amount of share Limited by guarantee-under MOA to a fixed amount to be contribute towards its assets in case its winding up. Non trading cos generally. Formed for the promotion of Art, SC , culture and sports etc

 Unlimited co- Members are personally liable for the debts of the co. May or may not have share capital. Only co can be sued. Court has to wind up .Liquidator will discharge the debts after property of the members is attached. Article must state with how many members the co is to be registered and if share capital is there then with how much share capital. Companies may also be classified as

 Association not for profit having license u/s 25 is permitted without ltd/pvt ltd Government companies->50per cent of the paid up capital is held by central /state /partly by central and state. subsidiary of government company is also a government co. Foreign companies-Incorporated out side India but having business in India ie office, godown /store house etc

 Holding and subsidiary co Holding co has control over other, ie subsidiary. Both enjoy separate legal entities: Company controlling composition of board of directors - has power without consent or concurrence of any other person to appoint or remove the holders of all or a majority of directorship if a director can not be appointed without exercise in his favor, where his appointment follows of his being or directorship is nominated by the co or its subsidiary.. Holding of majority of shares Subsidiary of another subsidiary

 Illegal Association No Co, association or partnership can consist of > than 10 for banking and > than 20 for any other for acquisition of gains unless it is registered. Charitable, social and religious etc are not included u/s 11. If the limit of members is exceeded then it is called an illegal association. Association not for Profit An association which formed not for profit but for promoting commerce, art , science, religion, charity or any other useful social purpose is called Association not for profit A licence may be granted by central government to such association with conditions given there under(Sec25).The same can also be revoked by central government after giving notice to this effect.

Public and private distinguished

In private co, no right to transfer of shares, can transfer. Membership limited to fifty no restriction in public. Prohibits any invitation to public to subscribe to shares or debentures Joint share holders will be treated as single member Minimum members for formation two (2) while in public it is ( 7) Name of the co must end up with Private limited/public

limited. Private no prospectus, public yes.

 Private at least two directors public at least three. In case of private co no written consent is required to be filed by directors to act as director with registrar of co or sign the memorandum of association or enter in to a contract for his qualification shares it is required in case of public limited co.

Contd.

Directors of private limited co may be appointed by a single resolution but it is not so in case of public limited co.
A private co can commence business after receiving certificate of incorporation while in case of public it can commence business only once it gets certificate to commence business fro registrar of companies

Contd.
Statutory meeting not required in Pvt. co while in case of public must hold and file a report with the registrar Two thirds of the Directors of public ltd co are required to retire by rotation , it is not so in case of private co No upper limit of directors in private but if more than twelve then central government permission is required Two in private and five members in public form the quorum

No restriction in private on managerial remuneration in public it can not exceed more than 11 per cent

MEMORANDUM OF ASSOCIATION

Memorandum of Association Charter of existence Contains fundamental conditions upon which alone the co can be incorporated Regulates the relations of co with the co Lays down the scope of operation Foundation on which co is founded Public document open for public scrutiny

memorandum should contain the following clauses(Sec13)

The name clause The registered office clause The object clause The liability clause The capital clause-registered, nominal or authorized The association clause

procedure for the formation of a Public Ltd. Company.

Any person who undertakes in the formation of the co is prima-facie promoter of the company. He is not the agent as there is no company as it is in existence. He is not a trustee as there no trust, The promoters stand in fiduciary position. They have in their hands the creation and molding of the co They have the power to define how and when and in what shape and under what supervision it shall start into existence and begin to act as a trading corporation. The fiduciary relationship imposes an obligation on the promoter that he must act honestly and must make a complete disclosure of all material facts relating to the formation of the company.

Difference between memo and Articles

Memo defines objects and power article by laws for int management Memo is supreme document while the article is subordinate Every co must have its own memo but a public co limited by shares may or may not have articles. It may adapt Table A of schedule 1 of the Act Memo defines relationship between the co and outside world Article relationship between members and co

 The duties are Not to make any secret profits and , To make full disclosure to the company

Steps in formation Decision about registered office location Availability of name from registrar of companies Promoters should obtain letter of intent under Industries (Development and regulation ) Act, 1951, if cos business comes under it The promoters should also fix up underwriters, brokers, bankers , solicitors, auditors and signatories of the memorandum MOA and Articles of Association should be then prepared. MOA to be signed by seven/two subscribers in case of public/ private co. Similarly AOA . should be stamped.

Evaluate various stages in the formation of a Company

Application for registration which must contain

MOA and AOA duly stamped signed and witnessed Nominal capital of the company Agreement if any with the MD, Whole time director or manager Any other agreement referred to in MOA or AOA Names of first directors and their Consent they have to give undertaking to take up and pay for qualification shares Statutory declaration that all requirements of the Act and rules have been complied with.

The declaration may be signed by any

Advocate of SC or HC Attorney or pleaded allowed to appear before HC CA or CS in whole time practice A person named as Director, MD, Mgr or secretary Prescribed fee Same as public co but,Only two subscribers are required, written consent of directors is not required

Certificate to commence business

A private co can commence business on getting certificate of incorporation but a public ltd co should obtain a certificate to commence business for those cos which have share capital Docs to be filed with the registrar Declaration that share payable in cash have been allotted up to the amount of minimum subscription(as stated in the prospectus) That every director has paid for the share contracted or allotted the amount as payable by the public on application and allotment

 The declaration that no money is liable to become refundable to the applicants by reason of failure to apply for the permission or by failure to obtain permission to deal on the stock exchange. Statutory declaration on non judicial stamp paper that all the above requirement have been complied with

 Memo is required to be filed with registrar but Article need not Any act of the co which is ultra vires Memo is void but ultra vires the Articles but intra vires the Memo can be ratified by the share holders by special resolution Memo can not Memo and Articles once registered become public document u/s 360.The public deemed to have known it becomes a constructive notice. They are not excepted to know whether internal procedures have been complied with. An outsider is entitled to assume that what has been done has been done regularly and can hold the company liable for non completion of internal formalities.

Define prospectus. What are the consequences that follow in the case of issue of a prospectus containing false statements on the strength of which shares are subscribed for?

Any notice, circular, advertisement or other document inviting deposits from the public or inviting offer from the public for the subscription or purchase of any shares in or debentures of body corporate. Private co Not required Statement to registrar in place of prospectus Forms containing the salient features of the prospectus- prospectus must be made available on request

Who is a promoter?
A promoter is any person or persons who conceive and bring a company into existence can be called a promoter or promoters. Law does not define the term promoter, it is more of a commercial term. It is the promoters who conceive the idea, analyse various aspects of business including profitability and then only further steps are taken to establish the company. Legally he is neither the agent as there is no company in existence nor the trustee because there is a trust. He only stands in fiduciary position towards the company to be formed.
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 What are pre-incorporation contracts?

The contracts entered into by the promoters of the company yet to be formed are called pre-incorporation contracts. A company can not be held responsible for pre-incorporation contracts as company was not in existence and as such was not a party to the contract. These contracts are not binding on the company. A co. also can not sue for the enforcement.

 These contracts can not be ratified by a company on formation. A contract can be ratified only if made by an agenton behalf of principal. For such contracts promoters are personally liable. However, under section 15 of Specific relief Act the contracts which the promoters have entered into before formation of the company for the purposes of the company and such contracts are warranted by terms of incorporation i.e they are within the scope of companys objects and further if such contracts are accepted by the company and this acceptance has been communicated to the other party then these can be enforced by the company and against the company.

A joint stock company

A joint stock company (JSC) is a type of business partnership in which the capital is formed by the individual contributions of a group of shareholders. Certificates of ownership or stocks are issued by the company in return for each contribution, and the shareholders are free to transfer their ownership interest at any time by selling their stockholding to others Ownership of stock confers a number of privileges. The company is managed on behalf of the shareholders by an elected Board of Directors. Consequently, the share owner may attend an annual general meeting, and vote for directors and sometimes the principal officers. The shareholders receive an annual report, and vote upon the yearly audited set of accounts. Other resolutions upon important decisions can be put to them. There are other meetings, which may be called, either regularly or by special resolution of either the Board or the shareholders themselves. Of course, individual shareholders can sometimes stand for directorships within the company, should a vacancy occur, but this is unusual. The shareholders are usually liable for any company debts that exceed the company's ability to pay. However, the limit of their liability only extends to the face value of their shareholding. This concept of limited liability largely accounts for the success of this form of business organisation. Ordinary shares entitle the owner to a share in the company's net profit. This is calculated in the following way: the net profit is divided by the total number of owned shares, producing a notional value per share, known as a dividend. The individual's share of the profit is thus the dividend multiplied by the number of shares that they own. The joint stock company was a forerunner of contemporary corporate entities such as the American business corporation, the British public limited company etc"joint stock company" is used as an English translation for business forms that more closely resemble corporations.While traditional joint stock companies still exist in some areas, they are generally considered an unattractive alternative to limited liability entities.

What are the different modes by which a firm may be dissolved?

By agreement. By notice. On the happening of certain contingencies. Compulsory dissolution. Dissolution by court.

 What are the different modes by which a firm may be dissolved? By agreement. By notice. On the happening of certain contingencies. Compulsory dissolution. Dissolution by court.

Lifting the corporate veil

Under the following special cases the separate corporate personality is disregarded For determining the character or status of company. For benefit of Revenue. For preventing fraud and improper conduct. Company acting as agent of the share holders. Where the doctrine conflicts with the public policy.

Personal liability of members

Reduction in membership( Section 45 ) If the company carries on business after the membership has been reduced below the statutory limited i.e of 7 in case of public limited and 2 in the case of private limited, every member is severally liable in case of debts entered into after the said period. Mis-description of the company- If any negotiable instrument or agreement is entered into by a member on behalf of the company and the name of the company is misdescribed then he would be personally liable. Fraudulent trading - If during the winding up it is discovered that the business of the company has been carried with intent of defrauding any creditor or any other person then the persons who were aware of such fraud will be personally liable without any limitation.

Holding and subsidiary co.

Where a company has control over another company it is called a holding company and the company over which it has the control is called subsidiary company. A company is under the control of other company when it controls the composition of the directors, when it has more than half of its nominal value of equity share capital, Holding company enjoys more than half of the total voting power. A subsidiary of another subsidiary company becomes subsidiary of the holding company.

Doctrine of ultra vire

An act ultra vires the directors , Articles, memorandum and co Act. Directors , articles can be ratified by General body, or by special resolution. Ultar vires memo is void. Same is the case with ultra vires co Act. No binding on company Can not ratify the agreement Promoters personal liability Co can not sue Position under specific relief Act

 When the application form is issued in connection with a bonafide invitation to a person to enter into underwriting agreement with respect to share and debentures Where the application form is issued in relation to share and debentures not offered to public. Where shares and debentures are offered to existing share holders(rights issue) where the issue relates to share and debentures which are uniform , or to be in all respects with shares and debentures previously issued and dealt in or quoted on a recognized stock exchange where invitation to public is made in the form of advertisement called as prospectus announcement.

Disclosure in prospectus Object of the co No and classes of shares being offered No of redeemable share intended to be issued Qualification share of directors Remuneration of directors Particulars of directors Contents of Articles or any contract regarding appointment of MD Minimum subscription for allotment The time for opening up of subscription list The amount payable on application and on allotment SECTION 56 of companys Act gives complete list

The following are the statutory requirements Issue of public after incorporation Consent of SEBI Dating of prospectus Registration of prospectus Written consent of those whose names have been mentioned as auditors, legal advisors solicitors , bankers brokers etc To be issued within 90 days of its copy having been delivered for registration Expert to be unconnected with the formation or management of the co Terms of contracts mentioned in the prospectus not to be varied Consequences of applying share in fictitious manner 5 years

How can Articles of Association be altered?

These are rules and regulations which govern the internal management of the company. These should not contain any thing which contravenes the Memorandum or the company Act. Every private limited co, accompany limited by shares guarantee and an unlimited co must have Article of association which must be registered along with Memo. It not obligatory for public co limited by share to have their own articles. This co can either have their own articles or adopt the rules and regulations contained in Table A of schedule1 of Companies Act (section 28)

Statement in lieu of prospectus You may not invite public participation in share capital if this could be arranged other wise. However, information required as in schedule 11 is required to be filed with the registrar of the companies . This is known as Statement in lieu of prospectus. The liability of person authorizing its delivery to registrar is both civil ( for compensation those who suffer loss on account of this) and criminal resulting in imprisonment up to 2 years and fine up to Rs. 5,000 or both. A private co is not required to file statement

 Company Meetings Meeting of members Discuss calling, holding and purpose of the following meetings Statutory Annual General Meeting(AGM) Extra ordinary general meeting Class Meetings of share holders of different classes

Statutory meeting Who should hold it? Co limited by shares /guarantee having share capital When should it be held? within not less than one month and not more than six months of entitlement to commence business-[ section 165 (1) ] once in life time of co. 21 days prior to the meeting shorter notice if consent of members or resolution by members holding 95 per cent of the paid up capital- notice

 Notice Statutory report Contents- Share allotted - cash received-abstract-Director, auditors and other managerial personnel-Contractsunderwriting contracts-Arrears of call commission and brokerage Certification of report Procedure at the meeting Effect of non compliance Liable for fine up to Rs. 5,000 If default in statutory report to registrar may be wound up by the Tribunal (Sec 433(b))

 The Tribunal may Direct that that the statutory report shall be delivered or that a meeting shall be held Order the costs to be paid by any persons who in the opinion of the tribunal are responsible for the default

 Annual General Meeting Statutory requirement to hold one AGM in a calendar year ( 01 Jan to 31 December ) Objectives Presentation of Annual accounts Declaration of dividends Appointment of auditors Appointment of directors in place of retiring directors in rotation Special business When should it be held? First within 18 months from incorporation Adjournment into next year

 Power to convene BOD Notice 21 days prior shorter notice if all the members agree Date ,time and place of AGM Postponement for bona fide reasons by BOD Adjournment Central government may call AGM Penalty co and every member of the co in default fine up to 50,000 and 2500 for each day when the default continues.

 Extraordinary Annual General Meeting Who can convene? BOD through resolution passed at duly constituted and convened meeting of the board, The directors on requisition out of India OR On requisitions by members - to be held within 45 days from deposit of notice, board has to send notices giving notice of 21 days 10per cent paid up share capital or if the co does not have share capital then 10 per cent voting power , By requisitions (Requisitioned meeting) If not held then it could be called by requisitions Company law Tribunal Of its own or

on the application of any director or on application of any memberQuorum 5/2 public / private one member no exceptions are when one holds all the share of a class AGM called by Tribunal under section 167 and under 186 In case quorum not present then the meeting gets adjourned to next day of the next week the Same time if within half an hour the quorum is not present then the member present are the quorum. Chairman given in Articles regulation Minutes of the meeting - every General Meeting, every meeting of board and every meeting of committee of board

Requisites of a valid meeting

Notice a notice giving time, date and place must be given 21 clear days before the meeting. A shorter notice if more than 95 per cent member who are holding fully paid up share consent either before the meeting or after resolution were passed. Statutory report- directors are required to send a statutory report 21 days before the meeting. However, if all members required to attend and vote agree then the then the report sent later is deemed to be duly forwarded. The statutory report consists of particulars of share allotted, cash received, an abstract of the receipts and payments, directors, auditors and other managerial persons, Contracts, underwriting contracts, arrear of calls, commission and brokerage. Certification of report-The report must be certified as correct by at least two directors.

Procedure at the meeting- At the meeting a list of members and the number of shares held by be placed, the members can discuss any matter arising out of the statutory report or regarding formation of the company. A resolution can however be passed only about the matter for which the notice has been given. Effect of non compliance- If any default is made in complying with the provisions of Sec. 165 the every director and officer of the company who is in default is liable to a fine which may extend to Rs. 5000. If default is in holding the statutory meeting or delivering the statutory report to the registrar, the co may be bound up by the tribunal. Where the petition is presented in on the above grounds of default the tribunal may;

May order that the statutory report may be delivered or meeting be held instead of making a winding up order or Order payment of costs by the person who in the opinion of the tribunal was in default

on the application of any director or on application of any memberQuorum 5/2 public / private one member no exceptions are when one holds all the share of a class AGM called by Tribunal under section 167 and under 186 In case quorum not present then the meeting gets adjourned to next day of the next week the Same time if within half an hour the quorum is not present then the member present are the quorum. Chairman given in Articles regulation Minutes of the meeting - every General Meeting, every meeting of board and every meeting of committee of board

Remedies to minority in case of oppression and mis-management

The Company Act has conferred powers on the Company Law Board and the Central Government to check oppression of minority and mismanagement by the majority. These are briefly discussed as under: Under Section 402 the company law board can make any order upon such terms and conditions as it thinks to be just and equitable under the given circumstances of the case for the conduct and regulation of the affairs of the company. Interim order can also be passed by the CLB, pending the final order. (Section 403) The central government has the power to appoint directors on an order passed by the CLB to effectively safe guard the interest of the company or its share holders or the public interest to prevent mis-management or oppression. The CLB can exercise its power in this regard on reference by central government , on application by not less than 100 members of the company or members holding not less than 1/10 th of the voting power.

Discuss winding up of a company by the court.

By court (compulsory winding up) Court having jurisdiction Grounds for winding up by court Special resolution- court may not wind up if it is opposed to public interest or against the interest of the company. Default in holding statutory meeting- petition by registrar or by a contributory Failure to commence business- within one year from incorporation suspends business for whole year Reduction in membership Inability to pay debts Just and equitable

 Where the substratum has gone main purpose have failed or impossible of achievement Complete deadlock in the management Where the company was formed for fraudulent or illegal purpose Where the principal share holders have adopted oppressive or aggressive policy towards minority share holders Where the company is a bubble no real business Who can put a petition? By co By creditors Any contributories or contributory-any person liable to contribute to the assets in the event of its winding up. And includes the shareholder of fully paid up shares Registrar As authorized u/s 243 on the receipt of the report of inspector appointed to investigate the affairs of the co. The official liquidator (sec 440)-Liquidator under voluntary and voluntary under courts guidance Members voluntary winding-when the company is solvent to meet the liability. Creditors- If no certificate is given u/s 500 or 501

Winding up Under supervision of court

After a co. has resolved to wind itself up voluntarily, the court may make an order that the voluntary winding up shall continue subject to its supervision on terms and conditions it thinks fit to impose. How can a company be wound up voluntarily ? By members-declaration of solvency within five weeks immediately preceding the resolution-delivered to the registrar- accompanied by a report of auditors. By creditors Where a declaration of solvency has not been filed it is presumed that the company is not fit to meet its liability within 3 years Under section 500 the company shall call a meeting of its creditors a resolution should be given to the registrar Creditors may appoint a committee of inspection

Difference between creditors voluntary winding up and members voluntary winding up

.

In case of voluntary winding up the co or members does not have to go to tribunal. It is procedurally simple. A co may be wound up voluntarily when The period fixed up by the articles has expired or on the happening of the event was to be wound up has happened .The co in general meeting can pass a resolution to wind up the company. The co can also pass a special resolution to wind up even if the company is prosperous. The resolution must be advertised in a news paper with a circulation in the district where the registered office of the company is located and also in official gazette within 14 days of passing such resolution. A members voluntary winding up takes place only when the company is solvent. Liquidator is appointed by members, no committee of inspection is appointed and no meeting of creditors is held. A declaration of solvency must be made fro voluntary winding up by the members. This has to be made by majority of directors and if found false they are liable to six months imprisonment and or fine up to fifty thousand rupees or both.

Where such a declaration is not duly made it will be called creditors winding up if made duly it is called members voluntary winding up. The provisions to members voluntary winding up are : Appointment of liquidator during a general meeting, it could be the same meeting in which resolution for voluntary winding up is passed. Boards power ceases on appointment of liquidator If any vacancy comes up in the office of the liquidator it will be filled up by a resolution in the general meeting. Notice of appointment of liquidator is to be given to registrar within 10 days. If at any time the liquidator is of the opinion that the company is not able to pay up the debts within time , a notice will be given to all the creditors and a statement of all the asset a liabilities of the company must be placed before the creditors in creditors meeting. A general meeting is required to be called at the end of the year and subsequently every year during the winding up. A general meeting on the conclusion of winding up where a statement giving all the happenings is to be placed. A copy of accounts is to be sent within one weak of conclusion of winding up to the registrar.

Creditors voluntary winding up

Where the co wants to wind up voluntarily and the directors are not in a position to make a declaration of solvency , the winding is creditors winding up. The procedure is the same as it is for the members voluntary winding up except in this case it is the creditors who appoint the liquidator and fix his remuneration and generally conduct the winding up proceedings. Meeting of creditors Notice to registrar Appointment of liquidator Committee of inspection Liquidators remuneration Power of board to cease Vacancy in liquidators office Meeting at the end of each year Final meeting and dissolution

members winding up and creditors voluntary winding up

Declaration of solvency is a must in members where as it is not necessary in the case of creditors winding up In members winding up there is no need to have creditors voluntary meeting but in creditors winding up it is required to have members meeting The liquidator is approved by members winding up where as both creditor and members approve the appointment of liquidator in the case of creditors winding up In creditors winding up there has to be committee of inspection it is not necessary in case of members winding up Control is exercised by members / creditors in voluntary winding up by either of them. In members winding up the liquidator can exercise some of the special powers with the sanction of Special resolution of the company , in case of creditors winding up it can be done with the sanction of Tribunal, committee of inspection or meeting of creditors.

Who is Official Liquidator?

For winding up the assets of the company are to be realized and distributed among creditors and share holders. For this purpose an official who is qualified and experienced professional is appointed .He is called official liquidator. According to new provisions after the 2002 amendments, a body corporate consisting of professionals as may be approved by the central government can be appointed as official liquidators.

Contributory
Every person who is liable to contribute to the companies assets in the event of companys winding up is called contributory. A member who has fully paid up share is not normally considered as contributory as he is not liable to contribute unless he so wishes. Where fully paid up shares were issued without consideration then he is liable for full amount.

Statement of Affairs

Once the winding up order is made or official liquidator is appointed as provisional liquidator ,a statement of affairs is to be made on a prescribed form and verified by an affidavit and handed over to the official liquidator. The statement must contain the following particulars Assets of the company giving separately cash balance, bank balance and negotiable instruments. Debts and liabilities of the company The names residents and occupation of creditors The debts due to the company and the particulars of the debtors Any other information as the official liquidator may require

Discuss the salient features of societies registration Act

The Societies registration Act, 1860, deals with associations or societies which are formed for promoting cultural activities charity, religion or any other useful purpose. The societies registered under the act get legal status of a corporation. A society is formed by memorandum of Association and registration. The purposes for which the society could be registered are given in Section 20 of the Act. These are : Charitable purpose Orphan funds

For promotion of science, literature , fine arts Diffusion of knowledge Diffusion of political education For founding and maintenance of libraries. Work of arts Collection of natural history

The object clause of the society can be altered through a special resolution provided such change has been agreed upon by 60 % of the members present or through proxy and confirmed by the votes of 60% members present at second special meeting convened by governing body after an interval of one month. Government permission is required only in the case of dissolution when the government is a member or contributor or otherwise interested in the society.

Forming a Company in India

A company is formed by registering the Memorandum and Articles of Association with the State Registrar of Companies of the state in which the main office is to be located. Foreign companies engaged in manufacturing and trading activities abroad are permitted by the Reserve Bank of India to open branch offices in India for the purpose of carrying on certain activities in India:

Activities which can be undertaken by Branch office of foreign company

To represent the parent company or other foreign companies in various matters in India, for example, acting as buying/selling agents in India, etc. To conduct research work in which the parent company is engaged provided the results of the research work are made available to Indian companies to undertake export and import trading activities to promote possible technical and financial collaboration between Indian companies and overseas companies.

Application for permission to open a branch, a project office or liaison office is made via the Reserve Bank of India by submitting form FNC-5 to the Controller, Foreign Investment and Technology Transfer Section of the Reserve Bank of India. For opening a project or site office, application may be made on Form FNC-10 to the regional offices of the Reserve Bank of India. A foreign investor need not have a local partner, whether or not the foreigner wants to hold full equity of the company. The portion of the equity thus not held by the foreign investor can be offered to the public.

 The ROC will give the certificate of incorporation after the required documents are presented along with the requisite registration fee, which is scaled according to the share capital of the company, as stated in its Memorandum. A private company can commence business on receipt of its certificate of incorporation. A public company has the option of inviting the public for subscription to its share capital. Accordingly, the company has to issue a prospectus, which provides information about the company to potential investors. The Companies Act specifies the information to be contained in the prospectus. The prospectus has to be filed with the ROC before it can be issued to the public. In case the company decides not to approach the public for the necessary capital and obtains it privately, it can file a "Statement in Lieu of Prospectus" with the ROC. On fulfillment of these requirements, the ROC issues a Certificate of Commencement of Business to the public company. The company can commence business immediately after it receives this certificate

Certificate of Incorporation
After the duly stamped Memorandum of Association and Articles of Association, documents and forms are filed and the filing fees are paid, the ROC scrutinizes the documents and, if necessary, instructs the authorised person to make necessary corrections. Thereafter, a Certificate of Incorporation is issued by the ROC, from which date the company comes in to existence. Although a private company can commence business immediately after receiving the certificate of incorporation, a public company cannot do so until it obtains a Certificate of Commencement of Business from the ROC

Documents Required to be filed along with Registrar of companies

The documents/forms stated below are filed along with Memorandum of Association and Articles of Association on payment of filing fees (depending on the authorised capital of the company): Declaration of compliance, duly stamped Notice of the situation of the registered office of the company Particulars of Directors, Manager or Secretary Authority executed on a non-judicial stamp paper, in favour of one of the subscribers to the Memorandum of Association or any other person authorizing him to file the documents and papers for registration and to make necessary corrections, if any The ROCs letter (in original) indicating the availability of the name.