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8/2/2019 Company Law Unit - 1
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COMPANY LAW
Section3(1) : Company means a company formed and Section43 : Default in complying with the conditions
registered under the Companies Act,1956 contained in Section3(1)(iii) constituting
or an existing company. a private company.
Section12(2)(b) : Company limited by guarantee i.e. one Section44 : Conversion of private company into public
having the liability of its members company - By altering the Articles.limited by the memorandum to such
amount as the members may respectively undertake by Section45 : Consequences of membership falling
the memorandum to contribute to the assets of the Co. in below legal minimum (7 in case of public
the event of its being wound up. and 2 in case of a private company).
Section25 : Registration of an association or Section31(2A) : Where the articles of association are
Non-Profit Making Companies with limited altered in order to convert a public
liability. company into a private company, then
as per Rule 4B of the Companies (Central Governments)
Section3(1)(iii) : Private Company General Rules and Forms, 1956 the co. must have
approval of the Central Govt. and after obtaining theSection560 : Defunct Company approval of the Central Govt., it must file with the
Registrar a printed copy of the articles as altered within
Section3(1)(iv) : Public Company one month of the date of receipt of the order of approval.
Lifting of Corporate Veil & the cases in Bowman Vs Secular Society Ltd. :
which Veil of a Company can be lifted Where the purpose is not lawful, i.e., where any of the
objects is illegal, the Registrar may refuse to register and
Salomon Vs Salomon & Co. Ltd. : if he register, the certificate of registration is
A company is a legal person distinct from its members. It not conclusive for this purpose and the registration itself
has its own corporate personality. This principle may be may be cancelled by the Central Government taking
referred to as the veil of incorporation. appropriate proceedings.
Callaghar Vs Gerrnania Brewing Co. : Section34 : Upon the registration of the documents and
A company in reality is an association of persons who are the payment of the necessary fees, the ROC
in fact the beneficial owner of all the corporate property. issues a certificate that the company is
incorporated and in the case of a limited company that
The cases in which the courts have disregard the it is limited.
corporate personality of the company are :
(1.) Juggilal Vs CIT : For Protection of Revenue Section35 : A certificate of incorporation issued by the
Registrar in respect of any association, shall
(2.) Jones Vs Lipman : For Prevention of Fraud or be conclusive evidence of the fact that all
improper conduct the requirements of the Act have been complied with in
respect of registration.
(3.)
Daimler Co. Ltd. Vs Continental Tyre & Rubber Co. Ltd. Section13 : Contents of Memorandum of Association.
Determination of character of a company whether it
is enemy. Ultra Vires acts of the Company are void
(4.) Cilford Motor Co. Vs Horne : Where the company and inoperative wholly. The cases are :-
is a sham (not genuine). 1.)Ashbury Railway Carriage and Iron Co. Ltd. Vs Riche
2.) Re German Date Coffee Co.
(5.) Workmen of Associated Rubber Industry Ltd. Vs
Associated Rubber Industry Ltd. : Avoidance of Section16 : It allows for alteration of memorandum by awelfare legislation. special resolution followed by confirmation
(6.) Connors Vs Connors Ltd. : Protection of public thereof by the Company Law Board.
policy.
8/2/2019 Company Law Unit - 1
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Section20(1) : No Company shall register by a name Section31 : It vests companies with power to alter or
which in the opinion of the Central add to its articles.
Government is undesirable.
Section610 : Memorandum and Articles of Association
Section20(2) : If the proposed name of the company is of the company are construed as
identical with or too nearly resembles the public document.
name of another company which is already
in existence, the Central Government may refuse to The Royal British Bank Vs Turquand :
register it. Doctrine of constructive notice does in no sense mean
that the outsiders are deemed to have notice of the
Section21 : A Company by Special Resolution and the internal affairs of the company. Doctrine of Indoor
approval of the Central Government signed Management also known as Turquand Rule which is
in writing, change its name. the only limitation to the doctrine of constructive notice
includes that if an act is authorized by the articles or
Proviso to Section21 : An approval of Central Govt. memorandum, an outsider is entitled to assume that all
would not be necessary where the the detailed formalities for doing the act have been
change in name only includes addition or observed.
deletion of the words private consequent upon the
conversion as per the provisions of the Act of a public Preliminary or Pre - Incorporation Contracts :company into a private company or vice versa. These contracts are entered into by agents or trustees or
promoters on behalf of a prospective company before it
Section146 : The address of registered office may be has come into existence.
changed within the local limits of any city,
town or village where such office is situated Provisional Contracts : These contracts are entered by a
by just giving a notice to the concerned Registrar within company after its incorporation
30 days after the date of the change. But a special and before it is entitled to
resolution may be required if the change of the registered commence business.
office is from one village, town etc. to another village,
town etc. in the same State.
Section17(1) : It lists the purposes for which alteration of
objects is permitted.
Section18(1) : A company shall file with the Registrar a
copy of special resolution passed by the
company in relation to the clauses of
section17(1) within one month from the date of such
resolution with a printed copy of memorandum as altered.
Section19 : If documents required to be filed with the
Registrar under Section18 are not filed within
the prescribed time, the alteration shall at theexpiry of such period, become void and inoperative.
Section38 : No member of a company shall be bound by
an alteration made in the memorandum or
articles after the date on which he became a
member, if such an alteration requires him to take or
subscribe for more shares then the number held by him
as at the date of alteration or in any way increase his
liability, unless he agrees to it in writing.
Proviso to Section38 : Where the company is a club or
any other association and the alterationrequires the member to pay recurring or
periodical subscription at a higher rate, although he does
not agree in writing to be bound, it will bind him.