PRESENTATION ON COMPANY – ITS TYPES AND FEATURES

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What is a company?A Company is a voluntary association of

persons formed for the purpose of doing business, having a distinct name and liability.

It can be incorporated under the Companies Act (it may be any type of company)

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Features of a companyA company is considered as a separate

legal entity from its members, which can conduct business with all powers to contract.

Independent corporate entity. It is independent of its members.

Limited Liability. (either by share or guarantee). In a Limited Company, liability of its members is limited.

It can own property in its own name. The property is vested with the company, as it is a body corporate.

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The income of the members is different from the income of the company ( Income received by the members as dividends cannot be same as that of the company)

Perpetual succession: Death of the members is not the death of the company until it is wound up under relevant Laws.

As it is a legal entity or a juristic person or artificial person it can sue and be sued in its own name.

The company enjoys rights and liabilities which are separate from the members of the company

Features continued..

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Limited Company ( Limited by share or by guarantee)

Unlimited companyGovernment CompanyForeign CompanyPrivate CompanyPublic CompanySmall CompanyOne Person CompanyCompany with Charitable ObjectsHolding and Subsidiary Companies

Types of Companies

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Limited by Shares- In such companies, the liability of members is only the amount which remains unpaid on his shares.

Limited by Guarantee not having share capital-In this type of companies the Memorandum of Association (MOA) limits the members’ liability. It will be based on the undertaking that has been given in MOA for their contribution in case of a winding up.

Limited by guarantee having share capital- In such cases , the liability would be based on the MOA towards the guaranteed amount and the remaining would be from the unpaid sums of the shares held by the person concerned.

Limited Company

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There is no limit on the liability of the members. The liability in such cases would extend to the whole amount of the company’s debts and liabilities.

Here the members cannot be directly sued by the creditors.

When the company is wound up, the official liquidator will call upon the members to discharge the liability.

The details of the number of members with which the company is registered and the amount of share capital has to be stated in the Articles of Association (AOA).

Unlimited Company

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Government CompanyIn Govt. Company, 51% of the paid up

share capital is held by the government.The shares can be held by the central

government or state government or Partly by central and partly by two or more State governments.

For government companies, some special privileges are given.

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Foreign CompanyA company incorporated outside India, but

having a place of business in India.If it does not have a place of business in India

but only has agents in India it cannot be considered to be foreign company.

the place of business of a foreign company can be found out from the website of Ministry of Corporate Affairs (MCA)

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A company which has a minimum of two members and two directors.

The minimum paid up capital for a private Company shall be Rs. 1 lakh or more as prescribed by the Articles.

The maximum number of members to be fifty ( it does not include members who are employed in the company, persons who were formerly employed)

The rights to transfer the shares are restricted in the Private companies

continued….

Private Company

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Prohibits any invitation to the public to subscribe and therefore it cannot issue a prospectus inviting the public to subscribe for any shares in, or debentures of the company

It prohibits acceptance of deposits from persons other than its members, directors or their relatives.

If two or more are holding one or more shares in a company jointly, they shall for the purpose of this definition, be treated as a single member.

As there is no public accountability like a public company, there is no rigorous surveillance.

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Public CompanyA Public company means a company- > Which is not a private company

> Minimum number of members is 7 & Directors is 3.

> Which has a minimum paid-up capital of Rs 5 lakh or such higher paid-up capital, as may be prescribed

> Closely held Company and Listed Company

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Small CompanySmall company has been defined as a company

other than a public company having a paid-up share capital of which does not exceed fifty lakh rupees or such higher amount as may be prescribed not exceeding Rs.5 crore.

turnover of which as per its last profit and loss account does not exceed two crore rupees or such higher amount as may be prescribed which shall not be more than twenty crore rupees

The concept of Small Company has been introduced in India by the Companies Act, 2013.

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One Person CompanyA company which has only one person as a

member;A private company with only sole member is ‘one

person company’. Its Memorandum of Association (MOA) shall indicate the name of another person, with his consent, who shall, in the event of the subscriber’s death or his incapacity to contract become the member of the company (“Successor”). The Draft Rules provide that only a natural person may be a member or the successor. This will enable the unorganized sector of proprietorship firms with unlimited liability to transform into the organised version of a private limited company with limited liability.

The concept of One person Company has been introduced in India by the Companies Act, 2013.

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Companies with Charitable Objects It is formed as a limited company for promoting commerce, art, science,

religion, charity or any other useful object, and intends to apply its profits and income in promoting its objects,

The payment of any dividend to its members is prohibited.

The Central Government may grant licence and allow the association to be registered as a company with limited liability and without the addition to its name of the word "Limited" or the words "Private Limited".

The association may thereupon be registered accordingly and on registration shall enjoy all the privileges and be subject to all the obligations of limited companies.

A firm may be a member of this type of company.

This type of company shall not alter the provisions of its memorandum or articles except with the previous approval of the Central Government.

Such companies are generally associations, clubs or chambers of commerce.

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Holding and Subsidiary CompanyHolding company, in relation to one or more other

companies, means a company of which such companies are subsidiary companies.

subsidiary”, in relation to any other company (that is to say the holding company), means a company in which the holding company—(i) controls the composition of the Board of Directors; or(ii) exercises or controls more than one-half of the total share capital either at its own or together with one or more of its subsidiary companies

a company shall be deemed to be a subsidiary company of the holding company even if the control is of another subsidiary company of the holding company;

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Incorporation of a CompanyThe persons who conceive an idea of a

company and do the necessary work for formation of a company are called the promoters of the Company.

They may have to enter into pre-incorporation contracts for the formation of the company, which can be validated after the incorporation of the company.

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STEPS INVOLVEDApproval of namePreparation of the Documents i.e. MOA/AOA etc.Stamping of the Documents and submission for

vetting by the concerned Registrar of CompaniesCorrections in the documents as suggested by

the ROCUploading of the pre-vetted documents and

payment of the necessary feesSubmission of the physical copies of the

documents to the ROC.Approval for Registration

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Memorandum of AssociationIt is one of the most vital documents of the

company which contains the following : Name Situation of its registered office Objects of the company Capital with which the company is registered Liability Clause which states the extent of the

liability of its members

Provisions of Memorandum cannot be inconsistent with the provisions of the Companies Act.

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Articles of AssociationThe Articles of a company contains the

regulations for internal management of the company.

These are the bye-laws of the company.

It is the responsibility of the company to comply with the provisions contained in the Articles.

The provisions of Articles cannot be inconsistent with the provisions of Memorandum as well as Companies Act.

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NAME APPROVAL E-form 1A Information required1. About the Applicant – Name, address, occupation and email

Id2. Names (Max 6) in the order of preference, of the proposed

Company.3. Significance of names4. Main objects of the Company5. Names of the Promoters6. Information of the proposed Directors DIN Name of Father/Husband CIN, in case already a director of an existing company Date of Birth Permanent & Present Residential Address7. Proposed Authorised Share CapitalElectronically file Form 1A with MCA and make the payment.The name approval is valid only for 60 days.

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PREPARATION AND SUBMISSION OF DOCUMENTSE-form 1Memorandum of AssociationArticles of AssociationE-Form 18 for situation of Registered

OfficeE-Form 32 for Appointment of the First

DirectorsPower of Attorney To be executed by all the subscribers on

Stamp Paper of Rs 100/- To contain power to make alterations and

also to collect Certificate of Incorporation.22

STAMPING OF DOCUMENTS AND SUBMISSION FOR VETTING BY THE CONCERNED ROC

MOA-Rs 200/- on the first page of MOAAOA- 0.2% of the Authorised Share CapitalPower of Attorney- Rs 100/-Form 1-Rs 100/-

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DOCUMENTS TO BE SUBMITTED FOR VETTING MOAAOAPower of AttorneyForm 1Form 18Form 32Make all corrections as advised by the ROC

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UPLOADING OF DOCUMENTS Form 1 with following attachments

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APPROVAL OF REGISTRATIONThe concerned ROC will issue the e-

Certificate the CIN on satisfactory completion of all the formalities

Finally the COI can be collected from the office of ROC or will be sent directly to the Promoter.

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Public Private Partnership (PPP)Public Private Partnership (PPP) Project

means a project based on a contract or concession agreement, between a Government or a statutory entity on the one side and a Private Sector Company on the other-side, for investing in construction and maintenance of infrastructure asset  and / or  delivering an infrastructure service.

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Government FundingThe Scheme for Financial Support to Public Private

Partnerships (PPPs) in Infrastructure. (Viability Gap Funding Scheme) of the Government of India provides financial support in the form of  grants, one time or deferred, to infrastructure projects undertaken through public private partnerships with a view to make them commercially viable.  It is a Plan Scheme administered by the Ministry of Finance. Suitable budgetary provisions are made in the Annual Plans on a year-to- year basis for the scheme.

To address the financing needs of these projects, various steps have been taken like setting up of India Infrastructure Finance Company and launching of a Scheme to meet Viability Gap Funding (VGF) of PPP projects. Setting up of infrastructure funds are also being encouraged and multilateral agencies such as Asian Development Bank have been permitted to raise Rupee bonds and carry out currency swaps to provide long term debt to PPP projects.

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What is a special purpose vehicle (SPV)?A special purpose vehicle (SPV), as the name suggests, is formed for a special purpose. Therefore, its powers are limited to what might be required to attain that purpose.

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How does SPV functionAn SPV is a firm, which embodies a

financial contract. SPVs are originally used to isolate financial risk. A special purpose vehicle is being set up to finance a large project without putting the entire firm at risk.

It is a legal person, where every action of the firm is defined by pre-specified contracts like concession agreement etc..

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BOOKS OF ACCOUNTS OF SPVThere will be separate records for funds

received from equity, loan and expenditure.

The accounting books of the company are maintained on accrual basis.

Maintaining books of accounts generally accepted accounting principles, accounting standards prescribed by ICAI and relevant provisions of companies act are followed.

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