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Home List Manuals Companies LawCompanies Act, 1956 - Ready Reckoner [OLD]Ready Reckoner - Companies Act, 1956 This

Companies Act, 1956 - Ready Reckoner [OLD]

Ready Reckoner - Companies Act, 1956

COMPANY AS A BUSINESS MEDIUM

  • Contents

Company as a Business Medium:

 

“A Company means a company formed and registered under the Companies Act, 1956 or under the previous laws relating to companies – Section 3(1)(iii)

An association formed not for profit acquires a corporate life within the meaning of a company by reason of a license" - Section 25(1)

Characteristics:-

  1. Corporate Personality – Being a separate legal entity it bears its own name and acts under a corporate name.
  2. Limited Liability
  3. Perpetual Succession – Members may come and go but the company will go forever.
  4. Separate Property – no member can claim himself to be owner of Company property during its existence or winding up.
  5.  Transferability of Shares – Section 82
  6. Common Seal
  7. Capacity to Sue and Be sued
  8. Contractual Rights – A Company being a legal entity different from its members can enter into contracts in its own name.
  9. Limitation of Action - company cannot go beyond what is stated in   the Memorandum of Association.
  10. Separate Management – The Company is administered and managed by its managerial personnel.
  11. Voluntary Association for Profit
  12. Termination of Existence – Company is created by Law, carries on its affairs according to law and ultimately is terminated by means of law.

Nature, Form and Types of Business Enterprises

  1. Sole Proprietor – One man Company
  2. Joint Hindu Family – undivided family businnes
  3. Partnership – Minimum TWO and maximum 20 members, 10 in case of Banking Company – section 11
  4. Co- operative Society
  5. Company

Concept of Corporate Personality

Lifting of Corporate Veil:-

Where a fraudulent and dishonest use is made of legal entity, the individuals concerned will not be allowed to take shelter behind the corporate personality – Section 45, 147, 212, 247 and 542.

Personal Liability Of Directors and Members:

  1. Reduction of Membership below the statutory minimum  -  Section 45
  2. Mis – description of name – Section 45
  3. Subsidiary Company – A holding company is required to disclose to its members the accounts of its subsidiaries - Section 212 and 214
  4. Fraudulent Conduct – Section 542
  5. Failure to return Application Money if the minimum subscription has not been received – Section 69(5)
  6. Misrepresentation in Prospectus – Section 62
  7. Non payment of Tax
  8. Ultra vires Acts
 

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