Introduction

The Company Act came into force from 1st April

1956. The Act was based upon the recommendation of company law committee appointed under the chairmanship of Mr. C.H. Bhaba on 25-10-1950. The committee submitted its report in 1952.The Indian company act extends to the whole India. The companies act 1956 states that company includes company formed and registered under the Act or an existing company i.e. a company formed or registered under any of the previous company laws.

DEFINITION
Company is a voluntary association of

persons formed for the purpose of doing business having a distinct name and limited liability.

Cont
The law relating to companies, in India is

contained in the companies Act, 1956,as amended from time to time.

Characteristics Of a Company
123456Separate Legal Entity Artificial Person Perpetual Existence Common Seal Limited Liability Transferability of Shares

Separate Legal Entity

A company is an separate legal entity means it is different from

its members. It works as a individual body.

It can make contracts, open a bank account, can sue and be sued

by others.

Artificial Person
A company is a purely a creation of law. It is

invisible intangible and exists only in the eyes of law. It has no soul , no body, but has a position to enter or exist into a contract. In short it can do every thing just like a natural person.

Perpetual Existence
Section 34(2) of the act states that an

incorporated company has perpetual life. The life of the company is not related to the life of the members . Law creates the company and law alone can dissolve it. The existence of the company is not affected by death , insolvency , retirement or transfer of share of members.

Common Seal
A company being an artificial person can not

work as a natural being. Therefore, it has to work through its directors ,officers and other employees , Common seal used as a official signature of a company.

Limited Liability
It means that the liability of a member shall

be limited to the value of the share held by him , he cannot be called upon to bear the loss from his personal property.

Transferability of shares
The share of a company are freely

transferable . The shareholder can transfer his share to any person without the consent of other members.
A company can not impose absolute restrictions on the rights of member to transfer their shares.

Types Of Companies
Incorporated Liability Number of Members Control Ownership

INCORPORATED
1-CHARTERED COMPANIES

These companies are incorporated under a special charter such as the east India company. The bank of England . The company act does not apply to it. 2-STATUTORY COMPANIES These companies are incorporated by special act of legislature(act of parliament or state legislature)eg.RBI , UTI , LIC

CON..
REGISTERED COMPANIES

companies registered under the Indian Companies Act , 1956 are called registered companies. To become a registered company one has to take the certification of incorporation from the registrar.

COMPANY WITH LIABILITY

COMPANY LIMITED BY SHARES[sec 12(2)a]

companies in which the liability of its members is limited to the extent of the amount unpaid on the shares held by a particular member. COMPANY LIMITED BY GUARANTEE The liability of members is limited to a fixed amount which members under take to contribute to the assets of the company in case of its winding up. UNLIMITED LIABILITY wherein members are liable for the debts of the company irrespective of their interest in the company.

Number Of Members
PRIVATE COMPANIES[sec 3(1)(

A private company is one which ,by its Article of association. - Restricts the rights to transfer its shares , if any - Limits the maximum number of its member to fifty. - Prohibits any invitation to the public to subscribe for any share or debenture of the company.

PULIC COMPANY
A Public company means a company which is

not a private company . In other words , a public company ,means a company which by its article does not. (1) Limit the number of its member. (2) Prohibit any invitation to the public to subscribe for any share in , or debentures , of the company

COMPANIES ACCORDING TO CONTROL

HOLDING AND SUBSIDIARY COMPANY

where a company has control over another company , it is known as the holding company. The company over which control is exercised is called the subsidiary company.

OWNERSHIP
GOVERNMENT COMPANY(sec 617)

a government company means any company in which at least 51% of the paid up share capital is held by the central government or by any state government or partly by one or more state government.

MEMORANDUM OF ASSOCIATION
The first step in the formation of the company is to prepare memorandum of association .It is one

of the documents which has to be filled with registrar of the companies at the time of incorporation of the company.
It is vital document , tells about the object of the companys formation , the power of the

company as well as the boundaries beyond which the action of the company can not go.

IMPORTANCE OF MEMORANDUM
It defines the rights and liabilities of the

members. It shows the capital structure of the company. It shows the object of the company. It specifies the state in which the registered office of the company is situated. It shows the constitution of the company It specify the conditions under which the company has been incorporated.

ARTICLE OF ASSOCIATION
The article of association are the bye laws of

the company according to which director and other officers are required to perform their functions as regards the management of the company, its accounts and audit.
Article of association of the company as

originally framed or as attained from time to time in presence of any previous companies law or of this act.

Contents Of Articles Of Association

Rights of different classes of shareholders. Use of common seal of the company. Keeping of book of accounts and their audits. Appointment, powers, duties, salaries of MD, manager and secretary. Borrowing power of directors. Voting rights of members. Board meetings and proceedings. Winding up company.