2. Introduction
According to sec. 2 (20) of The Companies Act, 2013:
“Company” means a company incorporated under the companies Act, 2013 or
under any previous company law.
3. On the basis of the size or number of
members in a company, a company can be
of following types :
● Private Company
● Public Company
● One- Person Company
4. On the basis of control, we find the following two main
types of companies:
● Holding Company
● Subsidiary Company
5. On the Basis of Ownership, companies
can be divided into three categories:
● Government Companies
● Non- Government Companies
● Associate Companies
6. Doctrine Of Ultra Vires
It states that the affairs of a company, has to be according to the objects
mentioned in the Memorandum of Association and can’t controvene it’s
provisions.
7. Advantages Of Private Company
● Ease of formation
● Personal Touch
● Greater flexibility
● Quick decisions
● Secrecy
8. Private limited company becomes public limited company
by:
● Conversion by default
● Conversion by operation of law
● Conversion by choice or by option
9. Procedure for conversion of public limited company to
private limited company:
Step 1: Hold Meeting of the Board of Directors (“BOD”) of the Company
Step 2: Hold a general meeting of Shareholders of the Company for their
consent to the said conversion along with the necessary alterations in the MOA
and AOA reflecting changes arising from the said conversion by means of
passing special resolution.
10. Step 3: To fill a prescribed e-form with Registrar of Companies (“ROC”) within
30 days of the passing of aforesaid special resolution.
Step 4: To file application for conversion with the adjudicating authority within
60 days from the date of passing special resolution in the General Meeting of
Shareholders.
11. Step 5 :To serve individual notice of conversion to each of its Creditors by
registered post. Company also has to send individual notice of conversion to
both, RD and ROC or any other authority which regulates the Company by
registered post.
Step 6: To file the application for conversion with Regional Directorate (“RD”) in
the prescribed e- form within 60 days from the date of passing special
resolution along with ceratin documents.
12. Step 7: In case no objections are received, then the RD will have to pass an
order duly approving the application within 30 days from the date of receipt of
application.
Step 8: the same is to be filed with ROC in the prescribed e- form within 15
days from the date of order. ROC shall close the former registration and issue
fresh certificate of incorporation thereby evidencing the conversion from Public
Limited Company to Private Limited Company.
13. Step 9: Company has to apply for conversion in the database of all tax
authorities i.e. PAN/TAN. Other registrations shall also ensure that the
letterheads, Invoices, etc. are amended and has undertaken necessary
updation of bank records.
14. Foreign companies
A foreign company, as per The Companies Act, 2013 is stated as:
“Foreign company means any company or body corporate incorporated outside
India which;
1. has a place of business in India whether by itself or through an agent,
physically or through electronic mode; and
2. conducts any business activity in India in any other manner”
15. Accounts of foreign company
Section 381 of The Companies Act, 2013 lays down the rules or instructions about how a foreign
company’s accounts are to be handled. It states that:
1.Every foreign company must, in every calendar year;
(a) make out a balance sheet and profit and loss account
(b) must deliver a copy of those documents to the Registrar.
2. If any document is not in the English language, there shall be annexed to it a certified translation
thereof in the English language.
3. Every foreign company shall send to the Registrar along with the documents required to be
delivered to him under sub-section (1), a copy of a list of all places of business established by the
company in India.
17. Types of Prospectus under the
Companies Act, 2013
There are mainly four types of a prospectus, as discussed in The Companies
Act, 2013, which are as under:
1. Abridged Prospectus: Mentioned in Section 2(1) of the Act,
2. Deemed Prospectus: Mentioned in Section 25(1) of the Act,
3. Shelf Prospectus: Mentioned in Section 31 of the Act
4. Red Herring Prospectus (RHP): Mentioned in Section 32 of the Act.
18. Offer of Indian Depository Receipts
(Section- 390)
The Central government makes rules for:
1. The offer of Indian Depository Receipt;
2. The requirement of disclosure in prospectus or letter of offer issued in
connection with Indian Depository Receipt;
3. The manner in which Indian Depository Receipt shall be dealt with in a
depository mode and by custodian and underwriters; and
4. The manner of sale, transfer or transmission of Indian Depository Receipts,
by a company incorporated, or to be incorporated outside India, whether
the company has or has not been established or, will or will not establish
any place of business in India.
20. Introduction
A government company is defined in Section 617 of The Companies Act, 1956
as:
“For the purposes of this Act, Government company means any company in
which not less than 51% of the paid- up share capital is held by the central
government, or by any state government or govenments or partly by the central
government and partly by one or more State Governments and includes a
company which is the subsidary of a company as thus defined”.
21. Features
● Separate legal entity.
● Incorporated under Companies Act 1956 & 2013.
● Management governed and regulated by the provisions of The Companies Act.
● The appointment of employees is governed by MoA and AoA (Memorandum of
Association and Articles of Asociation).
● Is funded by the government and other private shareholdings.
● The agency appointed by the central government audits the government company.
22. Merits
● In order to make a government company, all the provisions of the
Companies Act are to be followed.
● Enjoys, all autonomy in management decisions and flexibility in
routine(day to day) activities.
23. Limitations
● Face a lot of government interference and involvement of government officials,
ministers, and politicians.
● Because of being financed by the government, it evades all constitutional
responsibilities of not answering to the parliament.
● The company comprises mainly of politicians and civil servants, who keep on
pleasing their political party’s co-workers or owners and are not focussed on growth
and development of company. Hence efficient operations of the company are hindered.
24. Holding company and subsidiary company
A subsidiary company is a company owned and controlled by another company.
Holding company is essentially the company under whose control lies the subsidiary company (could
be one or more)
There is a difference between a parent company and a holding company in terms of operations. A
holding company has no operations of its own; it owns a controlling share of stock and holds assets
of other companies (the subsidiary companies).
A parent company is simply a company that runs a business and that owns another business (the
subsidiary). The parent company has operations of its own, and the subsidiary may carry on a related
business. For example, the subsidiary might own and manage property assets of the parent company,
to keep the liability from those assets separate.
25. Holding company and subsidiary has certain
grounds on which they share relationship,
such as;
● Consolidated Balance Sheet
● Stockholding
● Management and Control
● Responsibility
26. Investment in holding company
Subsidiary company can’t hold shares in it’s holding company. No company
can , either by itself or through its nominees, hold any shares in it’s holding
company and no holding company shall allot or transfer its shares to any of i’s
subsidiary companies and any such allotment or transfer of shares of a
company to its subsidiary company will be void. It has certain special
conditions attached to it.
27. Illegal Associations
● Taken care by section 464 of The Companies Act.
● No company, association or partnership consisting of more than 50 people can be formed to
carry on any business for gain unless it is registered under The Indian Companies Act.
● It may be registered under some other Indian law too. For example, in a limited liability
partnership formed for carrying on business for gain by professionals, registered under the
Limited Liability Partnership Act, 2008 is a legal body corporate.
● There is no limit to the maximum number of members in such a limited liability partnership.
28. Consequences for an Illegal Association:
There are two main consequences of forming an illegal association, which are:
● No Legal Existence
● Unlimited Personal Liability of the Members
