Company Act
The Companies Act, 1956 came into force on April
1, 1956. It consisted of 658 Sections and 15
Schedules. The major amendments were
introduced in the year 1960, 1963, 1965, 1974,
1977, 1988, 1999, 2000, 2002 and 2006.
The Companies Act, 2013 came into force on
August 29, 2013. The Act comprises of 29
chapters, 470 Sections with 7 Schedules.
It extends to the whole of India.
What is a Company
Companies Act, 2013 [(Sec.2(20)] “ Company means
a company incorporated under this act or under any
previous company law.”
“A company is an association of persons united for a
common purpose.”
-Justice James
“A company is an association of many persons who
contribute money or money’s worth to a common
stock and employs it in some trade or business, and
who share the profit and loss (as the case may be)
arising there from.”
-James Stephenson
What is a Company…..
• Company ordinarily means an association of a number of individuals
formed for some common purpose.
– When a company is registered, it is clothed with a legal personality
and has the same rights and powers as a human being has.
– Its existence is distinct and separate from that of its members.
– The members may die or change but the company goes on till it is
wound up on the grounds mentioned in the ordinance.
• Thus a company is an artificial person.
– It can act only through some human agency called the board of
directors.
– They control and administer the affairs of the company and act as its
agent.
– But they are not the agent of members of the company.
FEATURES OF A COMPANY
The various definitions quoted reflect the following
characteristic features that a company has:
Artificial person created by law
A company under the existing corporate law is an artificial legal
person
• having an entity and personality distinct from the members of
shareholders constituting it.
• A company is a legal person because in law it is capable of having
legal rights and obligations just like a natural person.
• Like every other human being it can acquire and own property,
transfer property, enter into contracts and sue and be sued in its
own name.
FEATURES OF A COMPANY….
Independent legal entity
• Since a company is an entity separate from its members hence all
assets and liabilities in a business are its own.
• No member can claim any ownership rights in it during its
existence or winding up.
– This was first recognized judicially in the case of Salomon vs. Salomon and
company Ltd. In which the House of Lords held that the company was a
body corporate distinct from its members
FEATURES OF A COMPANY
Perpetual succession
• A company has a continued existence and its life is not affected by
– the death, lunacy, insolvency or retirement of its members.
• Members may come and go but the company continues its
operations as long as requirements of law are fulfilled.
Common seal
• A company must have a common seal for use as an emblem (logo,
insignia) in all legal documents.
• The common seal is used as a device as the signature of the
company.
– Any document bearing common seal of the company and duly signed by at
least two directors will be legally binding on the company
FEATURES OF A COMPANY
Limited liability
• Here the word liability refers to the liability of the shareholders towards the
company.
– This is limited to the value of the shares subscribed to or the amount of guarantee given by
them.
Separate ownership and management
• Being in a large number it is not advisable for the shareholders to run and
manage the company.
– Hence the law provides for the board of directors, elected by the members at their general
meeting to govern the affairs of the company
TYPES OF COMPANIES
Registered Companies
Companies limited by companies limited by Unlimited
shares guarantee companies
Having share Not having share
capital capital
Private company Public company
Single member Other then Listed company Unlisted company
company single member
company
PROCEDURE FOR INCORPORATION OF A COMPANY THE COMPANIES ACT, 2013
I. Selection of type of the company.
II. Selection of name for the proposed company.
III. Apply for Directors Identification Number and
Digital Signatures, if does not have.
IV. Drafting of Memorandum and Articles of
Association.
PROCEDURE….
V. Stamping, digitally signing and e-filing of
various documents with the Registrar.
VI. Payment of Fees.
VII. Obtaining Certificate of Incorporation.
VIII. Obtaining Certificate of Commencement
of business (in case of public limited
Companies).
THANK YOU
