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Assignment 1

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14 views8 pages

Assignment 1

Uploaded by

nikhilsharma1942003
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Name: Nikhil

Registration No.: 46122210002


Program: B.B.A.L.L.B (H)
Submitted To: Dr. Parteek
Assignment 1.
Nature and kinds of companies
Introduction
section 2(20) of the CA, 2013 “company” means a company
incorporated under this Act or under any previous company law.
Commonly a company may be defined as “an incorporated
association which is an artificial person, having a separate legal
entity, with a perpetual succession, a common seal (if any), and a
common capital compromised of transferable shares and limited
liability.”

TYPES OF COMPANY
Types of Company on the basis of Incorporation
1. Statutory Companies:
These companies are constituted by a special Act of Parliament or
State Legislature. These companies are formed mainly with an
intention to provide the public services. Though primarily they are
governed under that Special Act, still the CA, 2013 will be
applicable to them except where the said provisions are
inconsistent with the provisions of the Act creating them (as
Special Act prevails over General Act). Examples of these types of
companies are Reserve Bank of India, Life Insurance Corporation
of India, etc.

2. Registered Companies:
Companies registered under the CA, 2013 or under any previous
Company Law are called registered companies. Such companies
come into existence when they are registered under the
Companies Act and a certificate of incorporation is granted to it
by the Registrar.

Types of Company on the basis of Liability


1. Companies limited by shares:
A company that has the liability of its members limited by the
memorandum to the amount, if any, unpaid on the shares
respectively held by them is termed as a company limited by
shares. The liability can be enforced during existence of the
company as well as during the winding up. Where the shares are
fully paid up, no further liability rests on them. For example, a
shareholder who has paid 75 on a share of face value 100 can be
called upon to pay the balance of 25 only. Companies limited by
shares are by far the most common and may be either public or
private

2. Companies limited by guarantee:


Company limited by guarantee is a company that has the liability
of its members limited to such amount as the members may
respectively undertake, by the memorandum, to contribute to the
assets of the company in the event of its being wound-up. In case
of such companies the liability of its members is limited to the
amount of guarantee undertaken by them. The members of such
company are placed in the position of guarantors of the
company’s debts up to the agreed amount. Clubs, trade
associations, research associations and societies for promoting
various objects are various examples of guarantee companies.

3. Unlimited Liability Companies:


A company not having a limit on the liability of its members is
termed as unlimited company. Here the members are liable for
the company’s debts in proportion to their respective interests in
the company and their liability is unlimited. Such companies may
or may not have share capital. They may be either a public
company or a private company.

Types of Company on the basis of number of


members
1. Public Company:
 Defined u/s 2(71) of the CA, 2013 – A public company means
a company which is not a private company.
 Section 3(1) of the CA, 2013– Public company may be
formed for any lawful purpose by 7 or more persons.
 Section 149(1) of the CA, 2013 – Every public company shall
have minimum 3 director in its Board.
 Section 4(1)(a) of the CA, 2013 – A public company is
required to add the words “Limited” at the end of its name.
 It is the essence of a public company that its shares and
debentures can be transferable freely to the public unlike
private company. Only the shares of a public company are
capable of being dealt in on a stock exchange.
 A private company that is a subsidiary of a public company,
will be considered a public company.

2. Private company:
 Defined u/s 2(68) of the CA, 2013 – A private company
means a company which by its articles— a. Restricts the
right to transfer its shares;
b. Limits the number of its members to 200 hundred (except
in case of OPC

3. One Person Company (OPC):


With the enactment of the Companies Act, 2013 several new
concepts were introduced that was not in existence in Companies
Act, 1956 which completely revolutionized corporate laws in India.
One of such was the introduction of OPC concept.
This led to the avenue for starting businesses giving flexibility
which a company form of entity can offer, while also offering
limited liability that sole proprietorship or partnerships does not
offers.

Types of Company on the basis of Domicile


1. Foreign company:
Defined u/s 2(42) of the CA, 2013 – “foreign company” means any
company or body corporate incorporated outside India which, —
has a place of business in India whether by itself or through an
agent, physically or through electronic mode; and conducts any
business activity in India in any other manner.

2. Indian Company:
A company formed and registered in India is known as an Indian
Company.

Other Types of Company:

Government Company:
Defined u/s 2(45) of the CA, 2013 – “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 Governments, or partly by the Central
Government and partly by one or more State Governments, and
includes a company which is a subsidiary company of such a
government company. Explanation – “paid-up share capital” shall
be construed as “total voting power”, where shares with
differential voting rights have been issued.

Small Company:
Defined u/s 2(85) of the CA, 2013 – “small company” means a
company, other than a public company, — 1. paid-up share
capital of which does not exceed 50 lakh rupees or such higher
amount as may be prescribed which shall not be more than 10
crore rupees; and
2. turnover of which as per profit and loss account for the
immediately preceding financial year does not exceed 2 crore
rupees or such higher amount as may be prescribed which shall
not be more than 100 crore rupees

Subsidiary Company:
Defined u/s 2(87) of the CA, 2013 – “subsidiary company” or
“subsidiary”, in relation to any other company (that is to say the
holding company), means a company in which the holding
company—
1. controls the composition of the Board of Directors
2. exercises or controls more than one-half of the total voting
power either at its own or together with one or more of its
subsidiary companies:

Nature of company
1. Separate Legal Entity
A company is regarded as a distinct legal entity separate from its
shareholders or members. This means it can own property, incur
debt, and enter into contracts in its own name.

2. Perpetual Succession
The life of a company is not affected by changes in its
membership. It continues to exist until it is dissolved in
accordance with the provisions of the Companies Act. The death,
insolvency, or withdrawal of any shareholder does not impact its
existence.

3. Limited Liability
The liability of the company's shareholders or members is limited
to the amount unpaid on their shares (in case of a company
limited by shares) or the amount they have agreed to contribute
(in case of a company limited by guarantee). This means their
personal assets are protected from the company's liabilities.

4. Artificial Person
A company is considered an artificial person, meaning it has the
rights and obligations of a legal person but lacks physical form. It
can sue and be sued, own property, and perform legal acts
through its board of directors or authorized officers.

5. Common Seal (Optional)


Prior to amendments, a common seal was a mandatory
requirement, acting as the official signature of the company.
However, under the Companies (Amendment) Act, 2015, having a
common seal is no longer mandatory.

6. Transferability of Shares
In the case of public companies, shares are freely transferable.
This allows shareholders to sell their interest in the company
without affecting its operations. Private companies, however,
have restrictions on the transferability of shares.

7. Capacity to Sue and Be Sued


Since a company is a separate legal entity, it has the right to take
legal action in its own name, and similarly, others can sue the
company in its name.

8. Registration and Incorporation


A company is created by the process of registration and
incorporation under the Companies Act, 2013. It comes into
existence only after it has been registered with the Registrar of
Companies (RoC).

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