Legal Aspect of Business

1. .Articles and Memorandumsthe Company Act 1956

2. The Company ACT of INDIA 1956 Prepared by AbhinavMohan(10DCP-052) AdeshMittal (10DCP-053) AdhipVarma(10DCP-054) AkankshaPandit(10DCP-055) AkashJauhari(10DCP-056) Alok Kumar Mishra (10DCP-057) AlokMunjal(10DCP-058) AniketPandey(10DCP-059) AnkitBhardwaj (10DCP-060) Under the guidance of Prof CMD P.K.Goel

4. Registered office clause

5. Capital clause

6. Liability Clause

7. Objects clause

9. Misleading Prohibition of use of certain names Ex: Name, emblem or official seal of UNO WHO Central and State government President and Governor Limited Public Company Private Limited  Private Company If the company is promoting art, science, religion etc Limited and Private Limited can avoided with the permission of central government.

11. Exact location of registered office should be intimated within 30 days

13. Cannot issue more shares for the time being

14. Equity or Preference shares

16. Company should commence its business with the main object

17. In case of non-trading companies ,state to which the objects extend should also be mentioned

19. Each subscriber must take at least 1 share

20. MOA should be signed by

21. At least 7 subscriber for Public company

22. At least 2 subscriber for Private company

26. Change within 12 months of registration

28. issue a fresh certificate of incorporation.

31. To attain its main by new improved means

32. To enlarge the area of operation

33. Adding to objects of MOA

34. To restrict or abandon a object

35. To sell or dispose

36. To amalgamate Procedure

39. Consolidation and subdivision of shares.

40. Conversion of shares into stock & vice versa.

42. Essential constituents of Article of Association:- Provision on the company name Address and Domicile Purpose Share Capital Numbers Type of Shares General meeting of shareholders Voting rights Administration and Audit body Form of publishing notice

43. Provisions for Article of Association The name of Association The Registered office of the Association Purpose which includes the various verticals in which the business is going to be there with the objectives and long term goal of the company. Details of Share’s of Company and there classification and distribution. The rights of owner and the shareholder Details of all the Shared Certificates and Intermediated securities Share Register Power of general meetings which includes the duration of Annual general meeting , the voting rights and the weighted of each vote Presiding officers and the minutes of general meeting

44. Provisions for Article of Association Number of directors Term of office Organization of board , Remunerations Powers of board in general Delegations of Powers No of Auditors and Rights and Duties of Auditors Details of financial year of the company Business Report Appropriation of profit resulting from the balance sheet Notices Winding up.

45. Alterations of Articles Every company has the power to alter its articles of association by a special resolution. Limitations on the power of alteration 1) It must not be in contravention of the provisions of the Act. 2) The power of Alteration in the article is subject to the conditions contained in the MoA. 3)An Alteration cannot require a member to purchase more shares or increase his liability in any way except with his consent in writing.(s.38- effect of alteration in the MoA or AoA) 4)Alteration must not constitute a fraud on the Minority

46. Differences betweenMemorandums of Association and Articles of Association

47. Differences betweenMemorandums of Association and Articles of Association

48. Differences betweenMemorandums of Association and Articles of Association

49. Effects of Memorandum and Articles 1. Members bound to Company Each Member must observe the provisions of articles and memorandum. In Boreland Trustee vs. Steel Brothers – it was held that a even a insolvent member is bound to articles. Shareholders therefore cannot among themselves enter into an agreement which is contrary to articles.

50. Effects of Memorandum and Articles 2. Company bound to members A company is bound to its members by whatever is contained in its memorandums and articles. A member can restrain a company for spending money beyond its powers. A member can breach company for enforcement of personal right like voting in general meeting. Action of breach of article against company can be brought only by a majority of members.

51. Effects of Memorandum and Articles 3. Members bound to members Rights and duties as stated in articles binds members. Articles do not create a express contract between members. It is a company alone which can sue the offender so as to protect the aggrieved member.

52. Doctrine of constructive notice : A companies memorandum and article of association become a public documents on registration with the Registrar of companies . These doc’s are available for public inspection in the registrar’s office of fees prescribed Every person who deals with the company is deemed to know the content of these two doc’s—this is known as Doctrine of constructive notice. It is presumed that the person who deals with the company have not only read these doc’s but also understood their clear meaning. Therefore if a person enters into a contract , which is beyond the power of the company, he cannot acquire any rights under the contract against the company

53. Case: Case-kotla venkatswami v ram murthi-here all deeds were to be signed by the managing dir. The secretary ,and a working dir as per article of the company . Now Ram accepted deeds from the company which was signed by only two of them on behalf of the company . therefore ram could not claim under this deed

55. -The rule is based on public convenience and justice and the following obvious reasons: The internal procedure is not a matter of public knowledge. An outsider is presumed to know the constitution of a company, but not what may or may not have taken place within the doors that are closed to him. 2. The lot of creditors of a limited company is not a particularly happy one; it would be unhappier still if the company could escape liability by denying the authority of officials to act on its behalf - The rule/doctrine is applied to protect persons contracting with companies from all kinds of internal irregularities

56. Exceptions to the rule: Knowledge of irregularity Negligence and suspicion of irregularity Representation through articles

57. CASE STUDY NUCLEAR POWER CORPORATION OF INDIA LIMITED (PUBLIC COMPANY LIMITED BY SHARES)

58. Memorandum Of Association Last amended Organization’s objective Core Members Share Capital

59. Article Of Association Rules And Regulations of the Organization Board Of Directors Audit Mechanism