company act-5 nov

8/7/2019 Company Act-5 Nov.

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Companies act 1956Companies act 1956


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Certificate of IncorporationCertificate of Incorporation

Effect of Certificate of Incorporation(Section 34)

On incorporation, the association of persons becomes abody corporate by the name contained in thememorandum, capable forthwith of exercising all thefunctions of an incorporated company and havingperpetual succession and a common seal but with such

liability on the part of the members to contribute to theassets of the company in the event of its being wound-up as is mentioned in the Act.


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Raising of CapitalRaising of Capital

A company may raise capitalthrough

Private placement

Issue of Prospectus

Private placementmeans raising ofcapital from friends, relatives andthrough brokers.


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Commencement of BusinessCommencement of Business(Section 149)(Section 149)

Where Company has issued a Prospectus:

a company cannot commence business orexercise borrowing powers unless:

(a) shares up to the amount of the minimumsubscription have been allotted by thecompany;

(b) every director of the company has paid tothe company, on each of the shares taken orcontracted to be taken by him and for which heis liable to pay in cash,


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Commencement of BusinessCommencement of Businesscontd.contd.

(c) there has been filed with the Registrar a duly verifieddeclaration by one of the directors or the secretary or,where the company has not appointed a secretary, asecretary in whole time practice in the prescribed form

that clauses (a) and (b)have been complied with.

Penalty:

Every person at fault may be fined upto Rs.5,000/- for

every day of default.


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Memorandum of AssociationMemorandum of Association

Every company has to have a Memorandum ofAssociation.

It contains, besides other significant information, the

objects for which the company is formed.

Object clause defines as well as confines thepowers of the company.

Anything done beyond these objects is ultra-vires the

company and void.


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Contents ofMemorandumContents ofMemorandum

1. Name Clause: It contains the name withwhich company is proposed to beregistered. Companies Act requires that:

(a) The name chosen should end with theword Limited or the words PrivateLimited, as the case may be.

(b) The name should not be undesirable i.e., itshould not be identical or too similar to thename of an already existing company ORinclude the name of a registered trademark unless consent of the owner of thetrade mark is obtained.


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2. Registered Office Clause:

This clause states the name of the State in whichregistered office of the company is to be situated.

3. Objects Clause

This clause is to be divided into:(a) Main objects and objects incidental or ancillary to

main objects(b) Other objects

A company cannot commence any business statedunder other objects unless special resolution by theshareholders is passed.


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4. Liability Clause

5. Capital Clause

This clause states the authorised capitaland the number of shares into whichthe same shall be divided.


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Articles of AssociationArticles of Association

The articles of association of a company are its bye-laws or rules and regulations that govern themanagement of its internal affairs and the conduct ofits business.

The articles regulate the internal management of thecompany. They define the powers of its officers. Theyalso establish a contract between the company andthe members and between the members.This

contract governs the ordinary rights and obligationsincidental to membership in the company.


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Alteration of ArticlesAlteration of Articles

Articles may be altered by a company bypassing special resolution at a generalbody meeting of shareholders.

However, where alteration has the effectof converting a public company into aprivate company, approval of Central

Government must be obtained.


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Doctrine of Constructive NoticeDoctrine of Constructive Notice

According to Section 610, every persondealing with the company is deemed tohave read M/A and A/A and understood the

contents thereof in the correct perspective.


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ProspectusProspectus

A prospectus, as per Section 2(36),means any document described or issuedas prospectus and includes any notice,

circular, advertisement or other documentinviting deposits from the public or invitingoffers from the public for the subscriptionor purchase of any shares or debentures

of a body corporate.


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ProspectusProspectus contd. contd.

Thus, a prospectus is not merely anadvertisement; it may be a circular oreven a notice. A document shall be

called a prospectus if it satisfies twothings:

(a) It invites subscription to shares ordebentures or invites deposits.

(b) The aforesaid invitation is made to thepublic.


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ProspectusProspectus contd. contd.

Thus, a prospectus is not merely anadvertisement; it may be a circular oreven a notice. A document shall be

called a prospectus if it satisfies twothings:

(a) It invites subscription to shares ordebentures or invites deposits.

(b) The aforesaid invitation is made to thepublic.


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What constitutes Invitation to PublicWhat constitutes Invitation to Public

As per Section 67, Invitation to publicincludes:

invitation to any section of the publichowsoever selected, provided the invitationis made to all the members of that sectionof public indiscriminately.

Invitation to 50 or more persons.


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I. COMPULSORY WINDING UPI. COMPULSORY WINDING UP


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CIRCUMSTANCES FOR WINDING UPCIRCUMSTANCES FOR WINDING UP

ON PASSING OF A SPECIAL RESOLUTION.

FAI

LUR

ET

OHOL

D STATUTO

RY MEE

TING.

FAILUREOF THE COMPANY TO COMMENCE

BUSINESS.

REDUCTION IN NUMBER OF MEMBERS

BELOW MINIMUM.


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INABILITY OF THE COMPANY TO PAY ITSDEBTS.

DEFAULT IN FILING BALANCE-SHEET, PROFIT& LOSS A/C OR ANNUAL RETURN.


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COMPANY ACTING AGAINST THE INTERESTOF SOVEREIGNTY AND INTEGRITY OF INDIA.

WHEN SICK INDUSTRIAL COMPANY ISUNABLE TO MAKE ITS NETWORTHEXCEEDITS ACCUMULATED LOSSES WITHIN AREASONABLE TIME.


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WHO CAN FILE WINDING UP PETITION ?WHO CAN FILE WINDING UP PETITION ?

COMPANY

CREDITORS

CONTRIBUTORY

REGISTRAR OF COMPANIES

CENTRAL GOVERNMENT


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WH AN BE APP INTED A FFI IALWH AN BE APP INTED A FFI IAL

LIQUIDATORLIQUIDATOR

A MEMBER FROM THE PANELOF THEPROFESSIONAL FIRMS OF CHARTERED

ACCOUNTANTS, ADVOCATES, COMPANYSECRETARIES, COST AND WORK

ACCOUNTANTS WHICH THE CENTRALGOVERNMENT MAY CONSTITUTE.

BODY CORPORATE APPROVED BY CENTRAL

GOVERNMENT.

WHOLE-TIMEOR PART-TIMEOFFICERAPPOINTED BY THE CENTRAL GOVERNMENT.


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PROCEDURE FOR WINDING UPPROCEDURE FOR WINDING UP

ADMISSION OF THE PETITION.

APPOINTMENT OF OFFICIALLIQUIDATOR.

TRIBUNAL TOHEAR PARTIES.

TRIBUNAL TO MAKE SUITABLEORDERS


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COMMITTEEOF INSPECTION.

AUDIT OF LIQUIDATORS ACCOUNT.


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PREPARATION OF STATEMENT OF AFFAIRSAND SUBMIT THE SAME TOOFFICIALLIQUIDATOR.

DISSOLUTION OF COMPANY.

WINDING UP ORDER TO BE FILED WITHREGISTRAR OF COMPNAIES.


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II. VOLUNTARY WINDING UPII. VOLUNTARY WINDING UP

MEMBERS VOLUNTARY WINDING UP.

CREDITORS VOLUNTARY WINDING UP.


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PREPARATION OF STATEMENT OF AFFAIRSAND SUBMIT THE SAME TOOFFICIALLIQUIDATOR.

DISSOLUTION OF COMPANY.

WINDING UP ORDER TO BE FILED WITHREGISTRAR OF COMPNAIES.


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II. VOLUNTARY WINDING UPII. VOLUNTARY WINDING UP

MEMBERS VOLUNTARY WINDING UP.

CREDITORS VOLUNTARY WINDING UP.


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H W MEMBER V LUNTARY WINDIN UP IH W MEMBER V LUNTARY WINDIN UP I

MADE?MADE?

ON COMPLETION OF THEOBJECT FOR

WHICH THE COMPANY WAS FORMED BYPASSING AN ORDINARY RESOLUTION ATGENERAL MEETING.

IN ANY OTHER CASE BY PASSING A SPECIALRESOLUTION AT THE GENERAL MEETING.


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PR EDURE F R MEMBER V LUNTARYPR EDURE F R MEMBER V LUNTARY

WINDING UPWINDING UP

NOTICEOF APPOINTMENT TO THEREGISTRAR.

FINAL MEETING AND DISSOLUTION.

REDIT R V LUNTARY WINDIN UPREDIT R V LUNTARY WINDIN UP


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REDIT R V LUNTARY WINDIN UPREDIT R V LUNTARY WINDIN UP --

PROCEDUREPROCEDURE

FIRST MEETING OF CREDITORS.

NOTICEOF THE RESOLUTION PASSED BY

CREDITORS TO REGISTRAR.

APPOINTMENT OF LIQUIDATOR

REDIT R V LUNTARY WINDIN UPREDIT R V LUNTARY WINDIN UP


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REDIT R V LUNTARY WINDIN UPREDIT R V LUNTARY WINDIN UP --

PROCEDUREPROCEDURE

FINAL MEETING AND DISSOLUTION.

RETURN TO REGISTRAR AND OFFICIALLIQUIDATOR.


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III. WINDING UP BY REGISTRARIII. WINDING UP BY REGISTRAR

company act-5 nov

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