Companies Act 1956
• Introduction
•Defn of Company
•Essential Features of Company
• Types of Companies
•Incorporation of Companies
•MOA and AOA
•Short Notes :
•Doctroine Of Ultra Vires , Indoor
Management , LLP and LLC , Sick
Co’s

Contd
• Registration of Companies
• Prospectus
• Directors of the Company
• Distn Betwn
• Partnership / Company
• Private Co/ Public Company

• The company Law seeks to
achieve the following:-
• To encourage investments
• To ensure proper administration
• To prevent malpractices
• To allow in Investigations

• A Company Act 1956 defines a
company as
• “Company which is formed and
registered under this act.”

• A company is defined as a
voluntary incorporated
association which is artificial
person, created by law with
limited liability having a common
seal and perpetual succession.

Essential Features Of A Company
1) Registration:- A company is to be
compulsorily registered under the
Companies Act.

2) Distinct Person(Separate legal
entity):-
A company is a distinct person
possessing its own identity. Its
altogether a separate legal entity
which is independent from its
members ,though controlled by the
Board of Directors.
In Salomon v/s A Salomon & Co
(1897) AC 22 it has been held that in
common law a company is a legal
person or has a legal entity separate
from its members and is capable of
surviving beyond the lives of its
members.

• Perpetual Succession :- A
company incorporated never dies.
It has a perpetual succession the
members may come and go but
the company can go forever and
remain the same entity. The
death or insolvency of the
members does not affect the
corporate existence of the
company.

• Artificial Person but not a citizen:-
The company is artificial person.
It functions through its Board of
Directors. However, it is not a
citizen as it cannot enjoy the
rights under the Constitution of
India or Citizenship Act.

• Transferrable shares:- A company
has the greatest advantage of its
shares being easily transferable.
Unlike a partnership concern,
where against the will of the
partners the transferee does not
become a partner the members
in an incorporated company can
easily transfer their shares.

• Limited liability :- The novel idea
of limited liability, for the first
time introduced in Company’s Act
of 1857.Any person can
participate in the share capital of
an incorporated company and the
limit his liability to the extent of
his participation.

• In limited liability members cannot
be called upon, in case of liquidation
or winding up of the company to
contribute more than what has
been agreed by them to subscribe
by way of participating in the share
capital of the company. Unlike
partnership concern where the
liability of each partner is unlimited
and he/ can be called upon to shell
out the last penny in the pocket to
meet the liabilities of the
partnership concern

• In a corporation the members can
be called upon to contribute only
to the only to the extent of their
unpaid up capital on shares
subscribed by them. This secures
members and encourages large-
scale investments in an
incorporated form of
organisation.
• Common seal:-The company has
separate legal existence under its
own common seal. It can enter
into contracts other companies.

• Separate property:- The company
being legally
distinct personality enjoys the
right to dispose off its property in
its name.
• Capacity to sue and be sued:- A
company can sue in its corporate
name. The company's right to sue
arises when some loss is caused
to the company.

Company and Partnership
Concern
Partnership Company
• Registration: • Registration of a
Registration of firm company is
is not compulsory. compulsory under
• Membership : Company Act.
Minimum two • Minimum two and
persons constitute a maximum fifty
partnership constitute a Private
.maximum Limited company
membership in case and For public
of partnership Limited Company
doing banking minimum seven
business is ten and maximum
persons and for unlimited constitute
other business is its requirement.
twenty persons.

Membership Membership
• Minimum two • Minimum two and
persons constitute a maximum fifty
partnership. constitute a Private
• Maximum Limited company
membership in case and For public
of partnership Limited Company
doing banking minimum seven
business is ten and maximum
persons and for unlimited constitute
other business is its requirement.
twenty persons.

Legal Status Legal Status
• Legal Status: A firm • A company has a
has no separate separate legal
legal status existence of its
own.

Management Management
• Management vests • Management vests
in the hands of the in the Board of
Partners Directors elected by
the Shareholders

Existence Existence
• Partnership has no • Company has a
perpetual existence perpetua; existence

Liability Liability
• Partners of the firm • The Liability of the
are liable to Shareholders is
Unlimited extent ie generally limited
in Partnership there
is an Unlimited
Liability

Death Death
• Death of the • Death of the
Partner may mean Shareholder does
dissolution of the not effect the
Partnership existence of the
company

Types of Companies
• Royal Charter or Chartered
Companies
• Statutory Companies
• Registered Companies

• Registered Companies
• > Companies Limited by Shares
• > Companies Limited by
Guarantee
• >Unlimited Companies
• Companies Limited by Shares
further are divided into Public
companies and Private
Companies

Companies Limited by
Shares
• These Co’s Have :
• Share Capital The Liability of each
Member of the Company is
limited by Memorandum to the
extent of the Face Value of the
Shares subscribed by him
• ( In other words during the
existence of the company or in
the event of Winding up a
member can be called upon to
pay the amount remaining unpaid
on the Shares subscribed by him

Companies Limited by
Gtee
• These Companies may or may not
have the Share Capital
• Each Member promises to pay a
fixed sum of Money specified in
the Memorandum in the venet of
Winding up /Liquidation of the
Company for the payment of
debts and Liabilities of the
Company
• This Amount promised by him is
the Guarantee

Unlimited Cos
• The Liability of the members in
these Co’s is Unlimited like an
Ordinary Partnership firm
(Without any Limit )