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2.6 Company.pptx

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2.6 Company.pptx

  1. 1. Company Dr. Vinod Kumar Yadav School of Humanities & Social Sciences HARCOURT BUTLER TECHNICAL UNIVERSITY Kanpur, India
  2. 2. Why Company… • The company form of organization was evolved to overcome the limitations of sole trader and partnership of organsiation. • It enables collection of vast financial and managerial resources with provision for limited liability and continuity of operations.
  3. 3. Company Definition… A Joint Stock Company is an incorporated and voluntary association of individuals with a distinctive name, perpectual succession, limited liability and common seal, and usually having a joint capital divided into transferable shares of a fixed value. Thus, it is an artificial person created by law. It can act on its name and others also can act to it.
  4. 4. Characteristics of Company • Distinctive name • Common seal • Artificial legal person • Separate legal entity • Perpetual succession • Unlimited life • Limited liability • Transfer of interest is possible • Professional management
  5. 5. Advantages of Company • Unlimited life • Limited liability • Professional management • Large capital resources • Recognized legal entity • Large scale production • Higher profit • Distributed risk
  6. 6. Disadvantages of Company • Formation complicated • Double taxation • Impersonal relationship • Separate management from owners • Lack of secrecy
  7. 7. Types of Company One Person Company Introduced in Companies Act 2013; single man company Tax holiday for first 03 Yrs under startup India No tax on dividend distribution Limited Liability Partnership Under Limited Liability Partnership Act 2008 Liability limited to their agreed contribution Separate legal entity Private Limited Company (Pvt. Ltd) Ownership transfer is restricted but relatively easy than LLP Tax holiday for first 03 Yrs. Under startup India Can not issue share. Preferred by VC, investors and banks Public Limited Company (Ltd.) Ownership transfer is allowed Voluntary association of members Can invite public for investment
  8. 8. Private Company Section 2(68) of Companies Act, 2013 defines private companies. According to that, private companies are those companies whose articles of association restrict the transferability of shares and prevent the public at large from subscribing to them. This is the basic criterion that differentiates private companies from public companies.
  9. 9. Formation of Private Company • Can be through online Simplified Proforma for Incorporating Company electronically (SPICe) on Ministry of Corporate Affairs • The number of members must be between 2-200. • There must be at least 02 directors and Max. 15 directors • There must be one third independent directors • Memorandum of Association (MOA) is defined under section 2(56) of the Companies Act 2013. It defines the constitution, powers and objects of the company. • The Articles of Association (AOA) is defined under section 2(5) of the Companies Act. It details all the rules and regulations relating to the management of the company. • Paid up capital of one lakh removed after 2015 amendment
  10. 10. Public Company A Public Limited Company under Company Act 2013 is a company that has limited liability and offers shares to the general public. It’s stock can be acquired by anyone, either privately through (IPO) initial public offering or via trades on the stock market. A Public Limited Company is strictly regulated and is required to publish its true financial health to its shareholders.
  11. 11. Formation of Public Company • Can be through online Simplified Proforma for Incorporating Company electronically (SPICe) on Ministry of Corporate Affairs • Minimum 07 members and max. no limit • Minimum of 3 directors • There must be one third independent directors (Govt. may specify independent directors in case of public limited company) • Minimum paid up capital as prescribed time to time (5 Lakhs) • Memorandum of Association, Article of Association, • Issue prospectus to invite public investment • Certificate of business commencement needed after registration
  12. 12. Sources of Fund: Company Source of Capital Ownership Capital Preference Share Equity Share Creditorship Capital Debenture Bond
  13. 13. Thank You Dr. Vinod Kumar Yadav School of Humanities & Social Sciences HARCOURT BUTLER TECHNICAL UNIVERSITY Kanpur, India Email: dr.vkyadav@yahoo.com

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