Company Law Bawa

Format No. QSP/7.1/01.F01Issue No.04 Rev. No 3 Dated: Jan 25, 2010

______________________________________________________________________________

UNIVERSITY OF PETROLEUM & ENERGY STUDIESCollege of Legal Studies

Dehradun______________________________________________________________________________

COURSE PLAN

Programme : BA.LL.B/BBA LL.B.Course : BA.LL.B/BBA LL.B.Semester : VSession : August- December 2012Batch : 2010– 15Subject Code : LLBL 421No. of credits : 4Subject : Company Law

Prepared by: Prof. N S BawaEmail: [email protected]

Approved By

_________________________ _______________________

HOD Dean

UPES Campus Tel : +91-135-2261090/91“Energy Acres” Fax : +91 135- 2694204P.O. Bidholi, Via Prem Nagar Web : www.upes.ac.inDehradun -248 007 (U K)

UNIVERSITY OF PETROLEUM & ENERGY STUDIESCollege of Management and Economic Studies, Dehradun

LEVEL OF KNOWLEDGE REQUIRED:

Company law is the subject which gives the students a wider understanding on the law and

jurisprudence of corporate personality. The students are expected to know all the basic principles

in the company law and a thorough understanding of the relevant provisions of the Companies Act

1956.

Objectives of the Course:

To analyze the Legal provisions of Company LawTo develop the understanding of the Company Law and related practices in IndiaTo understand the role of Directors, Meetings and procedures and cases relating to Companies

Teaching-Learning Methodology:Lecture cum discussionSeminarsTutorials, Practical cases andContact Hours

Evaluation Scheme:Continuous Assessment Tests 30%Case Analysis 10%Assignment 10%Class Test 10%Mid Term 20%End Term Examination 50%

The course coverage

Midterm : First 4 modulesEnd term : Complete Course

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Module I

( A ) Introduction , Company Law Legislation – Historical Perspective – Nature –Meaning of a company Sec. 2(10) – - Mode of forming Incorporated company (S. 12)- Corporate Personality - Theories of Corporate Personality - Doctrine of “ Lifting the veil of Incorporation” by the Court on social, moral and economic grounds - Statutory provisions where under the members are held liable for certain acts : (Sections 45, 147, 542, 4, 212 etc. of the Companies Act, 1956) –Effect of Registration (S. 34) – Conclusiveness of Certificate of Incorporation (S. 35)

Case Studies:

Salomon vs. Salomon & Co. 1897 AC 22. Lee v. Lee’s Air Farming Ltd. 1961 AC 12. Ayush srivastav Diamler Co. Ltd. v. Continental Tyre & Rubber Co. Ltd. (1916) 2 AC 307 deepesh People”s Pleasure Park Co. v. Rohleder (1908) 109 Va 439 priyanka Dinshaw Maneckjee Petit, Re: AIR 1927 Bom. 371 mahak Bacha F. Guzdar v. CIT, Bombay AIR 1955 SC 74 anviksha Gilford Motor Co. v. Horne (1933) 1 Ch 935. Pooja m Delhi Development Authority v. Skipper Construction Co. (Pvt.) Ltd. (1997) 11 SCC 430 maitrayi MJ

Additional reference material:

For history of English Company Law, see Horrwitz, Historical Development of Company Law, (1946) 62 LQR ( Law Quarterly Review) 375; see Murray A. Pickering, The Company as a Separate Legal Entity, (1968) 31 Mod LR ( Modern Law Review) 497, Prof. Wormser, Piercing the Veil of Corporate Entity, (1912) 12 Columbia Law Review 496;

For Theories of Corporate Personality see Katsuhito Iwai, Persons, Things and Corporations: The Corporate Personality Controversy and Comparative Corporate Governance, (1999) 47 American Journal of Comparative Law , 583 – 632.(Cross references to many writings on the subject can be found from this article)

( B ) Kinds of companies - Definition of company, existing company, private company and public company Ss. 2(35), 2(37), 3 – Holding and Subsidiary Company (Ss. 2(19), 2(47), 4 - Listed Public Company (Sec. 2(23A) - Limited and Unlimited Companies – Power to dispense with ‘Limited’ in the name of charitable or other company (S. 25) popularly referred as S. 25 Companies –Government Companies (Ss. 2(18), 617) - Statutory companies – Unregistered companies (S. 582) - Producer Company ( Part-IXA, sections 581A – 581 ZT) – Companies Incorporated outside India ( Part XI, Ss. 591 to 608) referred commonly as Foreign Companies – One Person Company (as provided in The Companies Bill, 2011 vide Clause 3(1)(c)) – Body corporate S. 2(7) – Corporation Sole - Co-operative

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Society – Partnerships - Prohibition of associations & partnerships exceeding certain number (S. 11) - Limited Liability Partnership (LLP) – Refer to all related provisions

Module IIMemorandum of Association ( Ss. 13 to 24, 33 to 40) – Meaning ( Sec. 2(28)) - Importance – See Schedule I, Tables B, C, D & E for various Forms of memorandum of association – Requirements with respect to memorandum (S. 13 to 15) – Clauses/Conditions in the Memorandum i.e. Name clause, Registered office clause, Objects clause (main objects , other objects), Liability clause, Capital clause, Association or Subscription clause – Doctrine of Constructive Notice of registered documents - Doctrine of Ultra vires – Consequences of ultra vires transactions - Alteration of Memorandum Ss. 2(29) , 17, 17A, 18 & 19) – Change of Registered office from one place to another in the same city (S. 146) – Change of Registered office from one city to another in the same State (Ss. 146, 17A) – Change of Registered office from one State to another State (S. 17) - Effect of alteration in memorandum or articles (s. 38) - Act to override Memorandum & Articles ( Sec. 9) – (Refer all related provisions)

Case Studies:

Railway Carriage & Iron Co. Ltd. v. Riche (1874-80) All E.R. Rep Ext 2219 (HL) NehaCotman v. Brougham (1918 -19) All E.R. Rep 265 (HL) akshay P In re (Jon) Beuforte (London) Ltd. (1953) Ch. 131 PrateekBell Houses v. City Wall Properties Ltd. (1966) 2 All E.R. 674 saumik Introductions Ltd. Re, (1969) 1 All E.R. 887 shambhaviDr. A. Lakshmanaswami Mudaliar v. L.I.C. AIR 1963 SC 1185 somyaIn Re Mackinnon Mackenzie & Co. Pvt. Ltd. 71 C.W.N. 340 (1966) sagar Minerva Mills Ltd. v. Govt. of Maharashtra (1975) 45 Comp. Cas. 1 (Bom)arnav Bharat Commerce & Ind. Ltd. v. Registrar of Companies (1973) 43 Comp Cas. 275 (Cal.DB)bharatiUpper Ganges Sugar & Industries Ltd. In re. (2000) 27 SCL 369 (CLB-Cal.) ashima Jindal Vijaynagar Steel Ltd. In re. (2005) 63 SCL 7 madhur

For detailed study on the topic “ Ultra vires”, see L.H. Leigh, Objects, Powers & Ultra vires, (1970) 33 Modern Law Review 81 ; R. Bank ,Is the Doctrine of Ultra Vires Dead ? 20 ICLQ (International & Comparative Law Quarterly) 301

Module III

Articles of Association – Meaning & Importance (Ss. 2(2), 26 to 30 , 33 to 40- See Schedule I, Table A for Model A/A – Alteration of articles by special resolution (S. 31)– Limitation on power to alter articles - Binding Nature of Memorandum & Articles of Association (S. 36) - Doctrine of Indoor Management – Exceptions to the doctrine

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Case Studies:

Royal British Bank v. Turquand (1856) 119 ER 886 sunnys Kotla Venkataswamy v. Chinta Ramamurthy AIR 1934 Mad. 579 Freeman & Lockyer (A Firm) v. Buckhurst Park Properties (Mangal) Ltd. (1964) 1AllE.R630 Howard vs. Patent Ivory Manufacturing Co. (1888) 38 Ch D 156 B. Anand Behari Lal vs. Dinshaw & Co. (Bankers) Ltd. AIR 1942 Oudh 417 Ruben vs. Great Fingall Consolidated 1906 AC 439

Module IV

(A) Promoters – Definition and importance – Duty and Liability – Pre-Incorporation contracts - S. 15(h) of Specific Relief Act, 1963

Case studies:

Erlanger v. New Sombrero Phosphate Co. (1878) 3 App Cas 1218 Gluckstein vs. Barnes 1900 AC 240 Vali Pattabhirama vs. Sri Ramanuja Ginning & Rice Factory (Pvt) Ltd (1986) 60 Comp Cas 568 AP

(B) Prospectus – Definition (Section 2(36) – Importance – Contents and formalities of issue –Date of Prospectus (S. 55) - Matters to be stated and Reports to be set out in Prospectus (Section 56 r.w. Schedule II, Parts I, II & III ) - Golden Rule for framing Prospectus as laid down by Justice Kindersely in New Brunswick & Canada Rly & Land Co. vs. Muggeridge (1860) - Statement in lieu of Prospectus (Section 70) –Shelf Prospectus (Section 60A), Information Memorandum (Ss. 2(19B) , 60 B) - Red-herring Prospectus – Deemed Prospectus (Section 64) – Abridged Prospectus (S.2(1A, 56(3)) - Issuing Houses – Registration of Prospectus (S. 60) - Civil & Criminal Liability for mis-statement in Prospectus (Ss. 62 & 63) - Remedies for misrepresentation – Personation for acquisition, etc. of shares (S. 68A) – Powers of SEBI (Securities Exchange Board of India) (S. 55A)

Case Studies:

Nash vs. Lynde (1929) AC 158 R. vs. Kylsant (Lord) (1932) 1 KB 442 Derry vs Peek (1886-90) All ER Rep. 1 Yugantar vs. U O I (1997) 13 SCL 145 (Delhi)

Module V

SHARE CAPITAL

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Meaning of share, stock, debenture : Distinction between share and stock, share and debenture (Ss. 2(46), 2(12), 82, 95, 96 etc.) – Distinction between shareholder and Member (Ss. 2(47), 41 ) - Kinds of Share Capital to be issued by a Company (Ss. 85, 86) - Difference between Equity Shares and Preference Shares – Kinds of equity shares & Preference shares - Rights and obligations of the shareholders – Share with differential rights 2(46A) – Cumulative Convertible Preference Shares – Sweat Equity shares(S. 79A) – Founder’s shares – Rights shares – Bonus shares – No vote shares

Modes of raising share capital by a company: By private placement : By inviting public to subscribe through Prospectus : By issuing shares to the existing shareholders or Further issue of capital (Issuing Rights Shares S. 81) : SEBI Regulations regarding Initial Public Offer (IPO) : Book Building – Underwriting agreement – Green Shoe Option – Employee’s Share Option Schemes ( ESOP’s) - Initial Offer of securities to be in dematerialized form in certain cases (S. 68B)

Issue of securities at a premium & Issue of shares at a discount (Ss. 78 & 79) - Power of limited company to purchase its own securities or Buy-Back of Shares Purchase (Ss. 77, 77A, 77AA & 77B) - Share Warrants (Ss. 114 & 115) - Share Certificates (Ss. 84 r.w. 113)

Allotment of shares – Opening of subscription list – Oversubscription – Permission to deal on a Stock Exchange – Minimum subscription amount - Forfeiture of Shares (See Regulations 29 to 35 of Table A, Schedule I) - Surrender of SharesPower of limited company to alter its capital (94) – Increase of share capital (97) – Reduction of share capital (Ss. 100 to 104) - Transfer, Nomination and Transmission of Shares (Ss. 109, 109A, 109B, 110 & 111) Restrictions on acquisition of certain shares (Ss. 108 A to 108 I) - Penalty for impersonation of shareholder (S. 116)

Module VI

DIRECTORS & MANAGING DIRECTORS

(A) General Discussion and relevant statutory provisions - Meaning of “Director” S. 2(13) – Importance – Minimum number of directors (S. 252) – Only individuals to be directors (S. 252)

Appointment of Directors : First subscribers to be Deemed Directors (S. 254) – Appointment of Directors by shareholders – Voting by Proportional representation – Appointment of Additional Directors(S. 260), Alternate Director and Filling of Casual vacancies among directors (S. 262) by Board (Ss. 255, 256, 257, 263, 265) – Appointment of Director by CLB/ Appointment by the Central Govt. for the purpose of prevention of oppression and mismanagement – Right of company to increase or reduce the number of directors ( Ss. 25 ) –– Restrictions on appointment or advertisement of director (S. 266) – Nominee Director

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Director Identification Number (DIN) Ss. 266A to 266G Inserted by the Companies (Amendment) Act, 2006 w.e.f. 1.11.2006 – Procedure for obtaining DIN (Circular No. 5/2011 dated 4.3.2011 issued by Ministry of Corporate Affairs).

Share Qualification ( S. 270, Regulation 66 of Table A, Schedule I) – Disqualification of Director (S. 274) – Restriction in the number of Directorship (Ss. 275 to 278) – Vacation of office by Directors (S. 283) – Prohibition on assignment of office by Director (S. 312) – Director not to hold office or place of profit (S. 314) – Compensation for loss of office (Ss. 318 to 321) – Remuneration of Director (S. 309) –Director to disclose nature of his interest in any contract or arrangement entered into by or on behalf of the company (Ss. 299 to 302) – Duty of directors and persons deemed to be directors to make disclosure of shareholdings (S. 308) - Prevention of management by undesirable persons (S. 202 & 203) Removal of Director by shareholders (S. 284) – Removal of Managerial Personnel from Office by Central Government on the recommendation of the Tribunal (Chapter VI A, Ss. 388B to 388E) – Removal by Tribunal – Resignation by Director (Companies Bill 2011 contains a provision to this effect)

Managing Director – meaning - Ss 2(26), 267 to 269 – Number of companies of which one person may be appointed as managing director (S. 316) – Managing Director not to be appointed for more than 5 years at a time (S. 317) – Refer to other relevant provisions as may be discussed in the class.

Board of Directors – S. 2(6) – Board’s Powers and restrictions thereon – General Powers of Board (S. 291) – Certain powers to be exercised by Board only at meeting (S. 292) – Restrictions on powers of Board (S. 293) – Political contributions (Ss. 293A & 293B)

(B) Case Law Topics

Position of Directors – Directors as Agents – Directors as Trustees – Directors as Organs

Case Studies:

Ferguson vs. Wilson (1866) 2 Ch App 77 Ramaswamy Iyer vs. Brahmayya & Co. (1966) 1 Comp L J 107 Percival vs. Wright (1902) 2 Ch 421 see also Allen vs. Hyatt (1914) 30 TLR 444. Lennard’s Carrying Co. vs. Asiatic Petroleum Co. (1914-15) All ER Rep 280

Duties of Directors – Fiduciary Duty (Duty of utmost good faith) –Exploitation of corporate opportunities by the director – Trading in ‘Control’ – Insider Trading – SEBI (Insider Trading) Regulations, 1992 – Regulation 10B-5 of US Securities Exchange Regulations Duty of care, diligence and skill – Avoidance of provisions relieving liability of officers and auditors of company (S. 201) – Power of court to grant relief in certain cases (S. 633) -Clause 166 of the Companies Bill, 2011 prescribes seven duties of directors

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Case Studies:

Boston Deep Sea Fishing & Ice Co. vs Ansell (1886-90) All ER Rep. 65 Burland vs. Earle 1902 AC 83 Regal (Hasting) Ltd. vs. Gulliver Peso Silver Mining vs. Cropper (1966) 58 DLR (2d) 1. (Canadian case) Industrial Development Consultants Ltd vs. Cooley (1972) 2 All ER 1 Perlman vs. Feldmann (1955) 349 US 952 Securities & Exchange Commission (SEC) vs. Texas Gulf Sugar Co. (US Case)

Case Studies:

Module 7 Meetings & Procedures

MEETINGS OF THE COMPANY AND PROCEEDINGS (Ss. 165 to 197)

Statutory Meeting ( S. 165) – Annual General Meeting (AGM) (S. 166) – Power of the Central Govt. to call meeting (S. 167) – Calling of Extraordinary General Meeting on requisition (S. 169) – Powers of CLB to call meeting (S. 186) – Provisions regarding Notice for calling meetings – Explanatory statement to be annexed to notice (S. 173) – Quoram for meeting (S. 174) – Chairman of the meeting (S. 175) – Voting by show of hands – Voting by Proxy – Voting by Poll – Ordinary & Special Resolution (S. 189) – Circulation of member’s resolution (S. 188) – Registration of resolution & agreement (S. 192) – Minutes of the meeting (Ss. 193 to 195) – Publication of report of proceedings (S. 197) – Service of documents (Ss. 51, 52 & 53)

MEETINGS OF BOARD (Ss. 285 to 289) – Board to meet at least once in every three calendar months (S. 285) – Notice of meeting (S. 286) – Quoram for meetings (S. 287) – Procedure when meeting adjourned for want of quoram (S. 288) – Passing of resolutions by circulation (S. 289)

Module

Dividend Ss. 2(14A), 205 to 207

Dividend to be paid only out of profit (S. 205) – Meaning of profit, divisible profit – Unpaid dividend to be transferred to special dividend account (S. 205A) – Payment of unpaid or unclaimed dividend ( S. 205B) - Capitalisation of profits and issuance of Bonus shares – Dividend not to be paid except to the registered shareholders or to their order or to their bankers (S. 206) – Right to dividend, right shares and bonus shares to be held in abeyance pending registration of transfer of shares (S. 206A) – Penalty for failure to distribute dividend within thirty days (S. 207) – Investor Education and Protection Fund (S. 205 C).

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Books to be referred:

Principles of Modern Company Law, LCB Gower& Davies Sweet & Maxwell, 2008Principles of Corporate Finance Law, Eilis Ferran, Oxford University Press, 2008 Ramaiya Guide to The Companies Act, A Ramaiya, 2010, Edn 17 Company Law, Dr. Avtar Singh, Eastern Book Company, 15 Ed 2007Taxmann Company Law And Practice, A. K. Majumdar & Dr. G. K. Kapoor, Taxman Allied Services Pvt.Ltd., 2011-2012Lectures on Company Law and Competition Act, KS Anantharaman, 2009 (Reprint 2010)

Journals:

AIRSCCCompany Law Journal Chartered Secretary

Websites:www.mca.gov.inwww.wadhwa.comwww.westlaw.comwww.universal.comwww.manupatra.com

Sessions Topic Reference Pedagogy

1 – 3 ( A ) Introduction , Company Law Legislation – Historical Perspective – Nature –Meaning of a company Sec. 2(10) – - Mode of forming Incorporated company (S. 12)- Corporate Personality - Theories of Corporate Personality - Doctrine of “ Lifting the veil of Incorporation” by the Court on social, moral and economic grounds - Statutory provisions where under the members are held liable for certain acts : (Sections 45, 147, 542, 4, 212 etc. of the Companies Act, 1956) –Effect of Registration (S. 34) – Conclusiveness of Certificate of Incorporation (S. 35)

Principles of Modern Company Law, LCB Gower Principles of Corporate Finance Law, Eilis Ferran, Oxford University Press, 2008 Ramaiya Guide to The

PresentationCases DiscussionsQuestionsAssignments

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http://www.manupatra.com/

http://www.universal.com/

http://www.westlaw.com/

http://www.wadhwa.com/

http://www.mca.gov.in/


Companies Act, A Ramaiya, 2010, Edn 17 Company Law, Dr. Avtar Singh, Eastern Book Company, 15 Ed 2007Taxmann Company Law And Practice, A. K. Majumdar & Dr. G. K. Kapoor, Taxman Allied Services Pvt.Ltd., 2011-2012Lectures on Company Law and Competition Act, KS Anantharaman, 2009 (Reprint 2010)

4-7 ( B ) Kinds of companies - Definition of company, existing company, private company and public company Ss. 2(35), 2(37), 3 – Holding and Subsidiary Company (Ss. 2(19), 2(47), 4 - Listed Public Company (Sec. 2(23A) - Limited and Unlimited Companies – Power to dispense with ‘Limited’ in the name of charitable or other company (S. 25) popularly referred as S. 25 Companies –Government Companies (Ss. 2(18), 617) - Statutory companies – Unregistered companies (S. 582) - Producer Company ( Part-IXA, sections 581A – 581 ZT) – Companies Incorporated outside India ( Part XI, Ss. 591 to 608) referred commonly as Foreign Companies – One Person Company (as provided in The Companies Bill, 2011 vide Clause 3(1)(c)) – Body corporate S. 2(7) – Corporation Sole - Co-operative Society – Partnerships - Prohibition of associations &

Principles of Modern Company Law, LCB Gower Principles of Corporate Finance Law, Eilis Ferran, Oxford University Press, 2008 Ramaiya Guide to The Companies Act, A Ramaiya, 2010, Edn 17 Company Law,

PresentationCasesDiscussionQuestionAssignments

Page 10


partnerships exceeding certain number (S. 11) - Limited Liability Partnership (LLP) – Refer to all related provisions

Dr. Avtar Singh, Eastern Book Company, 15 Ed 2007Taxmann Company Law And Practice, A. K. Majumdar & Dr. G. K. Kapoor, Taxman Allied Services Pvt.Ltd., 2011-2012Lectures on Company Law and Competition Act, KS Anantharaman, 2009 (Reprint 2010)

8-12 MODULE – IIMemorandum of Association ( Ss. 13 to 24, 33 to 40) – Meaning ( Sec. 2(28)) - Importance – See Schedule I, Tables B, C, D & E for various Forms of memorandum of association – Requirements with respect to memorandum (S. 13 to 15) – Clauses/Conditions in the Memorandum i.e. Name clause, Registered office clause, Objects clause (main objects , other objects), Liability clause, Capital clause, Association or Subscription clause – Doctrine of Constructive Notice of registered documents - Doctrine of Ultra vires – Consequences of ultra vires transactions - Alteration of Memorandum Ss. 2(29) , 17, 17A, 18 & 19) – Change of Registered office from one place to another in the same city (S. 146) – Change of Registered office from one city to another in the same State (Ss. 146, 17A) – Change of Registered office from one State to another State (S. 17) - Effect of alteration in memorandum or articles (s. 38) - Act to override Memorandum & Articles ( Sec. 9) – (Refer all related provisions)

Principles of Modern Company Law, LCB Gower Principles of Corporate Finance Law, Eilis Ferran, Oxford University Press, 2008 Ramaiya Guide to The Companies Act, A Ramaiya, 2010, Edn 17 Company Law, Dr. Avtar Singh, Eastern Book Company, 15

PresentationCasesDiscussionQuestion Assignments

Page 11


Ed 2007Taxmann Company Law And Practice, A. K. Majumdar & Dr. G. K. Kapoor, Taxman Allied Services Pvt.Ltd., 2011-2012Lectures on Company Law and Competition Act, KS Anantharaman, 2009 (Reprint 2010)

13-15 MODULE - IIIArticles of Association – Meaning & Importance (Ss. 2(2), 26 to 30 , 33 to 40- See Schedule I, Table A for Model A/A – Alteration of articles by special resolution (S. 31)– Limitation on power to alter articles - Binding Nature of Memorandum & Articles of Association (S. 36) - Doctrine of Indoor Management – Exceptions to the doctrine

Principles of Modern Company Law, LCB Gower Principles of Corporate Finance Law, Eilis Ferran, Oxford University Press, 2008 Ramaiya Guide to The Companies Act, A Ramaiya, 2010, Edn 17 Company Law, Dr. Avtar Singh, Eastern Book Company, 15 Ed 2007Taxmann Company Law And Practice, A.


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K. Majumdar & Dr. G. K. Kapoor, Taxman Allied Services Pvt.Ltd., 2011-2012Lectures on Company Law and Competition Act, KS Anantharaman, 2009 (Reprint 2010)

16-18 MODULE - IV(A) Promoters – Definition and importance – Duty and Liability – Pre-Incorporation contracts - S. 15(h) of Specific Relief Act, 1963

Principles of Modern Company Law, LCB Gower Principles of Corporate Finance Law, Eilis Ferran, Oxford University Press, 2008 Ramaiya Guide to The Companies Act, A Ramaiya, 2010, Edn 17 Company Law, Dr. Avtar Singh, Eastern Book Company, 15 Ed 2007Taxmann Company Law And Practice, A. K. Majumdar & Dr. G. K. Kapoor, Taxman Allied


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Services Pvt.Ltd., 2011-2012Lectures on Company Law and Competition Act, KS Anantharaman, 2009 (Reprint 2010)

19-22(B) Prospectus – Definition (Section 2(36) – Importance – Contents and formalities of issue –Date of Prospectus (S. 55) - Matters to be stated and Reports to be set out in Prospectus (Section 56 r.w. Schedule II, Parts I, II & III ) - Golden Rule for framing Prospectus as laid down by Justice Kindersely in New Brunswick & Canada Rly & Land Co. vs. Muggeridge (1860) - Statement in lieu of Prospectus (Section 70) –Shelf Prospectus (Section 60A), Information Memorandum (Ss. 2(19B) , 60 B) - Red-herring Prospectus – Deemed Prospectus (Section 64) – Abridged Prospectus (S.2(1A, 56(3)) - Issuing Houses – Registration of Prospectus (S. 60) - Civil & Criminal Liability for mis-statement in Prospectus (Ss. 62 & 63) - Remedies for misrepresentation – Personation for acquisition, etc. of shares (S. 68A) – Powers of SEBI (Securities Exchange Board of India) (S. 55A)

Principles of Modern Company Law, LCB Gower Principles of Corporate Finance Law, Eilis Ferran, Oxford University Press, 2008 Ramaiya Guide to The Companies Act, A Ramaiya, 2010, Edn 17 Company Law, Dr. Avtar Singh, Eastern Book Company, 15 Ed 2007Taxmann Company Law And Practice, A. K. Majumdar & Dr. G. K. Kapoor, Taxman Allied Services Pvt.Ltd., 2011-2012Lectures on


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Company Law and Competition Act, KS Anantharaman, 2009 (Reprint 2010)

23-30 MODULE VSHARE CAPITAL

Meaning of share, stock, debenture : Distinction between share and stock, share and debenture (Ss. 2(46), 2(12), 82, 95, 96 etc.) – Distinction between shareholder and Member (Ss. 2(47), 41 ) - Kinds of Share Capital to be issued by a Company (Ss. 85, 86) - Difference between Equity Shares and Preference Shares – Kinds of equity shares & Preference shares Rights and obligations of the shareholders – Share with differential rights 2(46A) – Cumulative Convertible Preference Shares – Sweat Equity shares(S. 79A) – Founder’s shares – Rights shares – Bonus shares – No vote shares Modes of raising share capital by a company: By private placement : By inviting public to subscribe through Prospectus : By issuing shares to the existing shareholders or Further issue of capital (Issuing Rights Shares S. 81) : SEBI Regulations regarding Initial Public Offer (IPO) : Book Building – Underwriting agreement – Green Shoe Option – Employee’s Share Option Schemes ( ESOP’s) - Initial Offer of securities to be in dematerialized form in certain cases (S. 68B)Issue of securities at a premium & Issue of shares at a discount (Ss. 78 & 79) - Power of limited company to purchase its own securities or Buy-Back of Shares Purchase (Ss. 77, 77A, 77AA & 77B) - Share Warrants (Ss. 114 & 115) - Share Certificates (Ss. 84 r.w. 113)

Allotment of shares – Opening of subscription list – Oversubscription – Permission to deal on a Stock Exchange – Minimum subscription amount - Forfeiture of Shares ( See Regulations 29 to 35 of Table A, Schedule I) - Surrender of SharesPower of limited company to alter its capital (94) –

Principles of Modern Company Law, LCB Gower Principles of Corporate Finance Law, Eilis Ferran, Oxford University Press, 2008 Ramaiya Guide to The Companies Act, A Ramaiya, 2010, Edn 17 Company Law, Dr. Avtar Singh, Eastern Book Company, 15 Ed 2007Taxmann Company Law And Practice, A. K. Majumdar & Dr. G. K. Kapoor, Taxman Allied Services Pvt.Ltd., 2011-2012Lectures on Company Law and Competition Act, KS


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Increase of share capital (97) – Reduction of share capital (Ss. 100 to 104) - Transfer, Nomination and Transmission of Shares (Ss. 109, 109A, 109B, 110 & 111) Restrictions on acquisition of certain shares ( Ss. 108 A to 108 I) - Penalty for impersonation of shareholder (S. 116)

Anantharaman, 2009 (Reprint 2010)

31-40 M O D U L E VID I R E C T O R S & M A N A G I N G D I R E C T O R(A) General Discussion and relevant statutory provisions

Meaning of “Director” S. 2(13) – Importance – Minimum number of directors (S. 252) – Only individuals to be directors (S. 252)Appointment of Directors : First subscribers to be Deemed Directors (S. 254) – Appointment of Directors by shareholders – Voting by Proportional representation – Appointment of Additional Directors(S. 260), Alternate Director and Filling of Casual vacancies among directors (S. 262) by Board (Ss. 255, 256, 257, 263, 265) – Appointment of Director by CLB/ Appointment by the Central Govt. for the purpose of prevention of oppression and mismanagement – Right of company to increase or reduce the number of directors ( Ss. 25 ) –– Restrictions on appointment or advertisement of director (S. 266) – Nominee Director Director Identification Number (DIN) Ss. 266A to 266G Inserted by the Companies (Amendment) Act, 2006 w.e.f. 1.11.2006 – Procedure for obtaining DIN (Circular No. 5/2011 dated 4.3.2011 issued by Ministry of Corporate Affairs).

Share Qualification ( S. 270, Regulation 66 of Table A, Schedule I) – Disqualification of Director (S. 274) – Restriction in the number of Directorship (Ss. 275 to 278) – Vacation of office by Directors (S. 283) – Prohibition on assignment of office by Director (S. 312) – Director not to hold office or place of profit (S. 314) – Compensation for loss of office (Ss. 318 to 321) – Remuneration of Director (S. 309) –Director to

Principles of Modern Company Law, LCB Gower Principles of Corporate Finance Law, Eilis Ferran, Oxford University Press, 2008 Ramaiya Guide to The Companies Act, A Ramaiya, 2010, Edn 17 Company Law, Dr. Avtar Singh, Eastern Book Company, 15 Ed 2007Taxmann Company Law And Practice, A. K. Majumdar & Dr. G. K. Kapoor, Taxman Allied Services Pvt.Ltd., 2011-2012Lectures on Company Law and Competition Act, KS

PresentationCasesDiscussions

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disclose nature of his interest in any contract or arrangement entered into by or on behalf of the company (Ss. 299 to 302) – Duty of directors and persons deemed to be directors to make disclosure of shareholdings (S. 308) - Prevention of management by undesirable persons (S. 202 & 203) Removal of Director by shareholders (S. 284) – Removal of Managerial Personnel from Office by Central Government on the recommendation of the Tribunal (Chapter VI A, Ss. 388B to 388E) – Removal by Tribunal – Resignation by Director (Companies Bill 2011 contains a provision to this effect)Managing Director – meaning - Ss 2(26), 267 to 269 – Number of companies of which one person may be appointed as managing director (S. 316) – Managing Director not to be appointed for more than 5 years at a time (S. 317) – Refer to other relevant provisions as may be discussed in the class.Board of Directors – S. 2(6) – Board’s Powers and restrictions thereon – General Powers of Board (S. 291) – Certain powers to be exercised by Board only at meeting (S. 292) – Restrictions on powers of Board (S. 293) – Political contributions (Ss. 293A & 293B)

Anantharaman, 2009 (Reprint 2010)

(B) Case Law Topics Position of Directors – Directors as Agents – Directors as Trustees – Directors as Organs

Ferguson vs. Wilson (1866) 2 Ch App 77 Ramaswamy Iyer vs. Brahmayya & Co. (1966) 1 Comp L J 107 Percival vs. Wright (1902) 2 Ch 421 see also Allen vs. Hyatt (1914) 30 TLR 444. Lennard’s Carrying Co. vs. Asiatic Petroleum Co. (1914-15) All ER Rep 280

Duties of Directors – Fiduciary Duty (Duty of utmost good faith) –Exploitation of corporate opportunities by the director – Trading in ‘Control’ – Insider Trading – SEBI (Insider Trading) Regulations, 1992 – Regulation 10B-5 of US Securities Exchange Regulations Duty of care, diligence

Principles of Modern Company Law, LCB Gower Principles of Corporate Finance Law, Eilis Ferran, Oxford University Press, 2008 Ramaiya Guide to The Companies Act, A Ramaiya, 2010, Edn 17 Company Law, Dr. Avtar Singh, Eastern Book

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and skill – Avoidance of provisions relieving liability of officers and auditors of company (S. 201) – Power of court to grant relief in certain cases (S. 633)

Boston Deep Sea Fishing & Ice Co. vs Ansell (1886-90) All ER Rep. 65 Burland vs. Earle 1902 AC 83 Regal (Hasting) Ltd. vs. Gulliver Peso Silver Mining vs. Cropper (1966) 58 DLR (2d) 1. (Canadian case) Industrial Development Consultants Ltd vs. Cooley (1972) 2 All ER 1 Perlman vs. Feldmann (1955) 349 US 952 Securities & Exchange Commission (SEC) vs. Texas Gulf Sugar Co. (US Case)

Clause 166 of the Companies Bill, 2011 prescribes seven duties of directors

Company, 15 Ed 2007Taxmann Company Law And Practice, A. K. Majumdar & Dr. G. K. Kapoor, Taxman Allied Services Pvt.Ltd., 2011-2012Lectures on Company Law and Competition Act, KS Anantharaman, 2009 (Reprint 2010)

41-44M O D U L E VII

MEETINGS OF THE COMPANY AND PROCEEDINGS (Ss. 165 to 197)

Statutory Meeting ( S. 165) – Annual General Meeting (AGM) (S. 166) – Power of the Central Govt. to call meeting (S. 167) – Calling of Extraordinary General Meeting on requisition (S. 169) – Powers of CLB to call meeting (S. 186) – Provisions regarding Notice for calling meetings – Explanatory statement to be annexed to notice (S. 173) – Quoram for meeting (S. 174) – Chairman of the meeting (S. 175) – Voting by show of hands – Voting by Proxy – Voting by Poll – Ordinary & Special Resolution (S. 189) – Circulation of member’s resolution (S. 188) – Registration of resolution & agreement (S. 192) – Minutes of the meeting (Ss. 193 to 195) – Publication of report of proceedings (S. 197) – Service of documents (Ss. 51, 52 & 53)

MEETINGS OF BOARD (Ss. 285 to 289) – Board to meet at least once in every three calendar months (S. 285) – Notice of meeting (S. 286) – Quoram for

Principles of Modern Company Law, LCB Gower Principles of Corporate Finance Law, Eilis Ferran, Oxford University Press, 2008 Ramaiya Guide to The Companies Act, A Ramaiya, 2010, Edn 17 Company Law, Dr. Avtar Singh, Eastern Book Company, 15 Ed 2007Taxmann Company Law

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meetings (S. 287) – Procedure when meeting adjourned for want of quoram (S. 288) – Passing of resolutions by circulation (S. 289)

And Practice, A. K. Majumdar & Dr. G. K. Kapoor, Taxman Allied Services Pvt.Ltd., 2011-2012Lectures on Company Law and Competition Act, KS Anantharaman, 2009 (Reprint 2010)

45-48M O D U L E VIII

Dividend Ss. 2(14A), 205 to 207

Dividend to be paid only out of profit (S. 205) – Meaning of profit, divisible profit – Unpaid dividend to be transferred to special dividend account (S. 205A) – Payment of unpaid or unclaimed dividend ( S. 205B) - Capitalisation of profits and issuance of Bonus shares – Dividend not to be paid except to the registered shareholders or to their order or to their bankers (S. 206) – Right to dividend, right shares and bonus shares to be held in abeyance pending registration of transfer of shares (S. 206A) – Penalty for failure to distribute dividend within thirty days (S. 207) – Investor Education and Protection Fund (S. 205 C).

Principles of Modern Company Law, LCB Gower Principles of Corporate Finance Law, Eilis Ferran, Oxford University Press, 2008 Ramaiya Guide to The Companies Act, A Ramaiya, 2010, Edn 17 Company Law, Dr. Avtar Singh, Eastern Book Company, 15 Ed 2007Taxmann Company Law And Practice, A. K. Majumdar & Dr. G. K. Kapoor,

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Taxman Allied Services Pvt.Ltd., 2011-2012Lectures on Company Law and Competition Act, KS Anantharaman, 2009 (Reprint 2010)

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