Company Law Unit - 1

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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.

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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.