CONTENT:

Introduction
Definition of company
Characteristics of company
Types of company
Formation of company
Memorandum of association
Article of association
Prospectus
Public deposits
Share & Share capital
Allotment of Shares
Members
Meetings
Winding up
 Companies Act, 2013
Introduction:
The Companies Act 2013 is an Act of the Parliament of
India which regulates incorporation of a company,
responsibilities of a company, directors, dissolution of a
company.
The 2013 Act is divided into 29 chapters containing
470 sections and 7 schedules.
The Act has replaced The Companies Act, 1956 (in a
partial manner) after receiving the assent of
the President of India on and with only 98 provisions 29
August 2013.
The Act came into force on 12 September 2013 with
few changes like earlier private companies maximum
number of member was 50 and now it will be 200. A
new term of "one person company" is included in this
act that will be a private company of the Act notified.
Another 184 sections came into force from 1 April 2014
 Companies act, 2013
Definition:

A company is an artificial
person created by law. It
has separate legal entity,
perpetual succession, and
common seal.
 Companies act, 2013

Characteristics of company:
1. Artificial person : the company becomes artificial person after
registration, it means that company hold property, enter into
contracts , borrow or lend money on its own name.
2. Separate legal entity : the company has a separate legal entity, it
means it is independent from its members.
3. Perpetual existence : it means the company is not affected by
death, lunacy or insolvency of its member.
4. Limited liability : Since the company has separate legal entity, its
shareholders only liable for their liabilities not the liable for debts of
the company.
5. Separate property : a company, being a legal person, is capable
of owing, using & disposing of property in its own name.
6. Common seal : the company have its own common seal. The
symbol of seal is the signature of director of company, because
company is an artificial person
 On the On the basis On the basis
basis of On the basis On the basis of
of number of of
liability of control ownership
members incorporation

Limited Public Chartered

company Holding Government
liability company company
company
Unlimited Private
company Statutory
liability Subsidiary Foreign company
company company
Guarantee Registered
liability
company
 Companies act, 2013

Formation of company:
In this promoter gives the idea of
forming a company.

Then next step is to registered the company

by its own name through registrar office.

After registration company gets the

certificate of incorporation.

Now, the company raises capital for

running business.

After raising capital company starts its

working.
 Note:
For forming a public company, after
registration it issues prospectus for
raising capital outside the company.
Then public company commence its
business.
After raising capital, public company
gets the Certificate of commencement
of business.
 Companies act,2013

Memorandum of association:
Section
2(28)

It lays down the objects

and powers of company
as well as scope of
operations of the
company beyond which it
cannot go.
 Companies act, 2013

Contents of MoA:
The Name clause: it consists of companys name.
The Registered office clause: it consists of name of
state in which the registered office of company
situated.
The Object clause: it consists of objective of
company.
The Liability clause : it consists of liability of
members.
The Capital clause: it consist of amount of share
capital of company.
The Association or Subscription clause: The names,
addresses, descriptions, occupations of the
subscribers, and the number of shares each
subscriber has taken and his signature attested by
a witness.
 Companies act,2013

Article of association:
Itcontains rules relating to the
management of its internal affairs.
They define the duties, rights, powers and
authority of the shareholders and the
directors in their respective capacities of
the company, and the mode and form in
which the business of the company is to
be carried out.
 Companies act,2013

Contents of AoA:
The business of the company;
The amount of capital issued and the classes of
shares the increase and reduction of share
capital;
The rights of each class of shareholders and the
procedure for variation of their rights;
The execution or adoption of a preliminary
agreement, if any; the allotment of shares; calls
and forfeiture of shares for non-payment of calls;
The allotment of shares; calls and forfeiture of
shares for non-payment of calls;
Transfer and transmission of shares;
 Companies act,2013

Contd.
Companys lien on shares;
Exercise of borrowing powers including issue of
debentures;
General meetings, notices, quorum, proxy, poll, voting
resolution, minutes;
Number, appointment and powers of directors;
Dividends interim and final and general reserves;
Accounts and audit;
Keeping of books-both statutory and others.
 Companies act,2013

Prospectus :

A prospectus means any document

described or issued as prospectus and
includes any notice, circular
advertisement or other document
inviting deposits from the public or
inviting offers from the public for the
subscription or purchase of any shares
in or debentures of a body corporate.
 Companies act,2013

Essential elements of
Prospectus:

There must be an invitation to the

public.
The invitation must be made by or
on behalf of the company.
The invitation must be to subscribe
or purchase of companies shares or
debentures or other instrument.
Registration of the Prospectus
Section
60

A copy of the prospectus duly signed

by every director or proposed
directors must be delivered to the
Registrar before its publication.
 Companies act,2013

Contents of Prospectus:
Companys name & address of its registered office,
Objects of company.
The number and classes of shares, if any, and the nature
and extent of the interest of the holders in the property
and profits of company.
The details about redeemable preference shares intended
to be issued, if any, i.e., the date & mode of redemption,
etc.
Qualification shares of directors.
Any provision in the articles as the remuneration of the
directors, managing directors.
The names, addresses and occupation of the directors,
managing directors or managers.
 Companies act,2013

Contd
The minimum subscription i.e., the minimum
amount which, in the opinion of directors, must be
raised by issue of shares.
The date and time of opening and closing of the
subscription list.
The amount payable on application and
allotment of each class of share.
Rights, privileges and restrictions attached to each
class of shares.
A reasonable time and place at which copied of
audited balance sheets and profit & loss A/c of
the company may be inspected.
 Companies act, 2013

Public deposits:

A company can raise deposits from the

public ranging for a period from 6 months
to 3 years.
These deposits carry rate of interest
specified by the concerned company.
 Companies act, 2013

Merits & Demerits of Public

Deposits:
Merits:
Cheaper source.
Low flotation costs.
Trading on equity.
Independence in management.
No security.
Flexibility.
Demerits:
o Misuse of funds because there is no security.
o Fixed obligation as interest.
o Unreliability.
o Unhealthy practice.
 Companies act,2013

Shares:

The share capital of a company is divided

into a number of indivisible units of
specified amount. Each of such unit is
called a share.
Classes of Shares: The most common
classes of shares are:
Preference;
Equity
 Companies act, 2013

Preference shares:
A preference share is one which carries the
following two rights over holders of equity
shares:
A preferential right in respect of dividends
at a fixed amount or at a fixed rate;
A preferential right in regard to
repayment of capital on winding up.
 Companies act, 2013

Types of preference share:

Participating& Non-participating.
Redeemable & Irredeemable.
Convertible & Non-convertible.
Cumulative & Non-cumulative.
 Companies act,2013

Equity shares:

Equityshare means a share which is not

preference share [Section 85].
The rate of dividend is not fixed.
 Companies act, 2013

Share capital:

It means the capital of a company,

or the figure in terms of so many
rupees divided into shares of a fixed
amount, or the money raised by the
issue of shares by a company.
 Companies act, 2013

Allotment of Shares:

It means and implies a division of the

share capital into defined shares of a
particular value or of different classes
and assignment of such shares to
different persons.
 Companies act, 2013

Members of company:

Every person:
Whose name is written in register of
members;
Who holding equity shares of company;
Who is beneficial holder.
 Companies act, 2013

Rights of members:

Claiming share certificate.

Duplicate share certificate.
Transfer of shares.
Voting regarding dividend.
Bonus share.
Copy of P&L A/c.
Attending meetings.
Appointing proxy.
Appointing auditor.
Appointing & removing directors.
Approaching court.
 Companies act, 2013

Duties of members:
Every member who has been allotted
shares is liable to pay the company the
total nominal value of shares held by him.
If member faces problem to pay any call or
installments, he is serve with notice to pay
call money which he is unpaid, he is liable
to pay interest which may have occurred.
 Companies act , 2013

Termination of members:
Transfer of share: if any member is not able to
pay his debt, he will transfer the share.
Forfeiture of shares: it means taken back of
shares from member due to his inability to pay
calls.
Surrender of shares.
Insolvency of shares.
Winding up of company.
Court order.
 Companies act, 2013

Meetings:
Meetings can be defined as lawful
association and assembly of two or more
persons by previous notice.

We can say that, gathering of persons for

discussion or decision of profits, shares,
policies, future plans etc..
 Types of meetings

Meetings of Meetings of Meetings of

Meetings of
Board of debenture holders Creditors
Shareholders
directors

Statutory Annual general Extra-ordinary

meetings meeting (sec.166 meetings(sec.16 Class
(sec.165) & 167) 9) meeting
 Companies act, 2013

Statutory Meeting (Sec. 165)

Every company limited by shares and every
company limited by guarantee and having a share
capital shall, within a period of not less than one
month and not more than six months from the date
at which the company is entitled to commence
business, held a general meeting of the members
of the company. This meeting is called the
statutory meeting.
This is the first meeting of the shareholders of a
public company and is held only once in the
lifetime of a company.
 Companies act,2013

Contd.
Statutory report: The Board of directors shall, at
least 21 days before the day on which the
meeting is to be held, forward a report, called
the statutory report, to every member of the
company.
Procedure at the meeting: (a) List of members.
(b) Discussion of matters relating to formational
aspect. (c) Adjournment.
 Companies act, 2013

Contd

Objects of the meeting and report

To put the members of the company in
possession of all the important facts relating
to the company.
To provide the members an opportunity of
meeting and discussing the management,
methods and prospects of the company.
To approve the modification of the terms of
any contract named in the prospectus.
 Companies act, 2013

Annual General Meeting (Sec.

166 and 167):
Every company conduct the meeting every year
known as Annual general meeting. There shall not
be an interval of more than 15 months between
one annual general meeting and another. But the
first annual general meeting should be held within
a period of 18 months from the date of its
incorporation.
A general meeting of a company may be
called by giving not less than 21 days notice in
writing.
 Companies act, 2013

Contd
This meeting is for discussion about
dividend payable to shareholders and
retention money for future plans.
In this meeting all stakeholders are gather
for decision.
 Companies act, 2013

Extraordinary General Meeting

(sec. 169):
A statutory meeting and an annual general
meeting of a company are called ordinary
meetings. Any meeting other than these meetings
is called an extraordinary general meeting. It is
called for transacting some urgent or special
business which cannot be postponed till the next
annual general meeting. It may be convened:
(1) By the Board of directors on its own or on the
requisition of the members; or
(2) By the requisitionists themselves on the failure
of the Board of directors to call the meeting.
 Companies act, 2013

Class meeting:
Under the Companies Act, class meetings of
various kinds of shareholders and creditors are
required to be held under different
circumstances. Under Sec. 106, class meetings of
the holders of different classes of shares are to
be held if the rights attaching to these shares are
to be varied
 Companies act,2013

Winding up:
Winding up is the process of selling all the
assests of a business, paying of creditors,
distributing any remaining assets to the
partners or shareholders an then dissolving
the business.
Simply, it means liquidation and closing
down of company.
 Winding up
Winding-up Voluntary under
by court winding -up supervision
of court

Member Creditor
voluntary voluntary
winding up winding up
 Companies act, 2013

Compulsory winding up under

an order of the court:
Winding up of company by court due to
following reasons:
Special resolution
Default in holding statutory meetings
Failure to commence business
Reduction in membership
Inability to pay debts
Just & equitable
Failure to file balance sheet
 Companies act, 2013

Petition of winding up:

By shareholder
By company itself
By registrar of company
By any creditor of company
By person authorized by central
government
By voluntary liquidator
 Companies act, 2013

Voluntary winding up:

It further sub-divided into :

Members voluntary winding up
Creditors voluntary winding up
 Companies act, 2013

A. Member voluntary winding

up:
In this case, directors declares in the
meeting of shareholders that company is
fit for winding-up. Through meeting
shareholders passes resolution for
voluntary winding up and appoints
liquidator.
 Companies act, 2013

Reasons for member voluntary

winding-up:
Expiry of period.
By special resolution.
Declaration of solvency of company.
Notice of appointment of liquidator to
given to registrar.
Final meeting and dissolution.
 Companies act, 2013

Creditors voluntary winding-

up:
Theprocedure in a creditors voluntary
winding-up is based upon assumption
that the company is insolvent.
 Companies act, 2013

Winding-up under supervision

of court:
At any time after passing resolution for
voluntary winding-up, the court may
make an order that the voluntary
winding-up should continue subject to
supervision of the court.
Application for such supervision order
may be made either by a creditor,
shareholder, the company or liquidator.
 Companies act, 2013

Contd..
The order passed by court due to following
reason:
Resolution for winding-up was obtained by
fraud.
The rules relating to winding-up order are not
being observed.
The liquidator is prejudicial or is negligent in
collecting the assests.
So the court takes all the power as in case of
compulsory winding-up and appoints additional
liquidators.
Thank
you
Presented by:
Yamini
Kahaliya
BBA(Honors)