Essentials of Company Law

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Author(s): Balachandran V

Product Code: vn79

This book Essentials of company Law is designed as a textbook for UG/PG Programmes of most Universities offering B.Com/BBA/M.Com,MBA and other Allied business courses. Salient Features: A structured approach covering company law provisions and practice is adopted in a simple and lucid style. Cover the syllabus of Corporate Structure and Administration, Corporate Administation, Corporate Management being offered by different universities in India. Incorpoate latest amenendments of companies Act, 2013 from 2015 to 2023.

Cover

Half-title

Title Page

Dedication

Contents

Preface

Highlights of the Companies Act, 2013

The Companies (Amendment) Act, 2015 - Key Amendments

Highlights of the Companies (amendment) Act, 2017

Highlights of the Companies (amendment) Act, 2019

Amendments in Company Law Since 2020 – Recent Developments

Part-I. Company Formation and Incorporation

Chapter 1: Nature of a Company

Meaning of a Company

Definition of a Company

Characteristic Features of the Company

Corporation or Body Corporate

Lifting or Piercing the Corporate Veil

Exceptions under Judicial Interpretation

Exceptions under Statutory Provisions

Illegal Associations (Section 464)

Consequences

Association Not for Profit or Licensed Companies (Section 8)

Limited Liability Partnership

Features of LLP

Difference between LLP and Company

Distinction between a Partnership and a Company

Review Questions

Chapter 2: Classification of Companies

Introduction

Basis of Classification of Companies

Classification of Companies

Classification on the Basis of Number of Members

Private Company

Public Company - Section 2 (71)

Distinction between a Public Company and Private Company

Classification on the Basis of Liability

Limited Liability

Companies Limited by Guarantee - Section 2(21)

Companies Limited by Shares - Section 2(22)

Unlimited Company - Section 2(92)

Classification on the Basis of Ownership

Government Company - Section 2(45)

Non-Government Company

One Person Company - Section 2(62)

Licensed Companies [Section 8]

Associate Company - Section 2(6)

Small Company – Section 2(85)

Dormant Company

Foreign Companies - Section 2(42)

Investment Companies [Section 186]

Public Financial Institution - Section 2(72)

Holding Company and Subsidiary Company

Private Companies

Exemption for Government Companies and Charitable Companies

Exemption for Private Companies

Exemption for Charitable Companies

Producer Companies

Objects of a Producer Company

Review Questions

Chapter 3: Formation and Incorporation of Companies

Introduction

Company Promotion

Company Formation (Stages)

Duties of Promoters

Incorporation of Companies

Application for Incorporation of Companies

Step for Formation of Company

Declaration by Professionals

Certificate of Incorporation is Conclusive Evidence

Consequences of Registration (Section 9)

Effect of Memorandum and Articles (Section 10)

Commencement of Business

Registered Office of the Company (Section 12)

Review Questions

Chapter 4: Memorandum of Association

Introduction

Purpose of Memorandum

Forms of Memorandum

Contents of Memorandum - Section 4(1)

Name Clause [Section. 4(1)(a)]

The Registered Office Clause [Section 4(1)(b)]

Objects Clause [Section 4(1)(c)]

Liability Clause [Section 4(1)d]

Capital Clause [Section 4(1)(e)]

Declaration for Subscription

Alteration of Memorandum of Association

Shifting of Registered Office within the Same State (Rule 28)

Alteration of Memorandum by Change of Name (Rule 29)

Doctrine of Ultra Vires

Review Questions

Chapter 5: Articles of Association

Meaning of Articles

Contents of Articles

Registration of Articles

Alteration of Articles

Alteration of Articles to be Filed With Registrar

Relationship between Articles and Memorandum

Doctrine of Constructive Notice

Doctrine of Indoor Management

Review Questions

Part-II. Mobilisation of Resources

Chapter 6: Prospectus

Introduction

Objectives of Prospectus

Prospectus - Definition

Contents of Prospectus

Reports

Information Memorandum

Misleading Prospectus

What is a False or Untrue Statement?

Who are Liable for Mis-statements in Prospectus?

Liabilities in Case of Mis-statements

Civil Liability

Allotment of Securities by Company (Section 39)

Return of Allotment with Other Documents

Review Questions

Chapter 7: Share Capital and Debentures

Share Capital

Kinds of Share Capital

Authorized Capital - Section 2(8)

Issued Capital - Section 2(50)

Subscribed Capital - Section 2(86)

Kinds of Shares

Nature of Shares or Debentures (Section 44)

Numbering of Shares (Section 45)

Share Certificate (Section 46)

Voting Rights

Equity Shares with Differential Rights - Conditions for Issue

Variation of Shareholders’ Rights (Section 48)

Issue of Shares at a Premium (Section 52)

Prohibition on Issue of Shares at Discount (Section 53)

Sweat Equity Shares

Definition of Sweat Equity Shares (Section 2(88))

Conditions for Issue of Sweat Equity Shares (Section 54)

Issue and Redemption of Preference Shares (Section 55)

Transfer and Transmission of Securities (Section 56)

Meaning of Transfer of Shares and Transmission of Shares

Transmission of Shares

Refusal of Registration and Appeal Against Refusal (Section 58)

Rectification of Register of Members (Section 59)

Rights Issue/Further Issue of Share Capital (Section 62)

Procedure for Issue of Shares on Rights Basis

Issue of Bonus Shares (Section 63)

Reduction of Share Capital (Section 66)

Buy Back of Shares (Sections 68 to 70)

Conditions for Buy Back of its Own Shares (Section 68(2)

Debt Capital

Definition of Debenture - [Section 2(30)]

Debenture

Debentures - General Details

Debenture Stock

Debenture - Main features

Kinds of debentures

Distinction between Shareholder and Debenture Holder

Issue of Debentures under the Companies Act, 2013

Nomination by Securities Holders (Section 72(1))

Review Questions

Part-III. Company Administration

Chapter 8: Company Administration - I

Director

Who may be the Directors?

Minimum Number of Directors

Maximum Number of Directors

Kinds of Directors

First Director

Woman Director

Independent Director

Small Shareholders’ Director

Director Identification Number

Application for DIN

Director to Intimate DIN

Obligation of Company

Disqualifications for Appointment of Director

Appointment of Directors

Appointment of Additional Director

Appointment of Alternate Director

Appointment of Nominee Director

Filling up Casual Vacancy

Appointment of Directors to be Voted Individually

Proportional Representation for Appointment of Directors

Duties of Directors

Statutory Duties

General Duties

Responsibilities of the Board of Directors

Liabilities of Directors

Number of Directorships

Resignation of a Director (Section 168)

Constitution of Important Committees

Audit Committee (Section 177)

Number of Members

Functions of Audit Committee

Powers of Audit Committee

Vigil Mechanism

Powers of Board (Section 179)

Board of Directors - Statutory Powers

Powers of Board under Companies (Meeting of Board and its Powers) Rules, 2014

Delegation of Power

Restrictions on Powers of the Board (Section 180)

Prohibition and Restrictions on Political Contributions (Section182)

Disclosure of Interest by Director (Section 184)

Loans to Directors (Section 185)

Contract by One Person Company

Prohibition of Forward Dealings in Securities of Company by Director

Prohibition on Insider Trading of Securities (Section 195)

Punishment

Restrictions on Communication and Trading by Insiders

Managing Director – Manager

Secretarial Audit

Related Party Transactions

Definition of ‘Related Party’

Definition of ‘Relative’

Related Party Transactions (Section 188)

Definition of ‘Office or Place of Profit’

Definition of ‘Arm’s Length Transaction’

Indemnification

Conditions

To be Included in the Board’s Report

Punishment

Review Questions

Chapter 9: Company Administration - II

Board of Directors and Board Committees

Board Committees

Constitution of Committees - Powers of the Board of Directors

Kinds of Board Committees

Mandatory Review by Audit Committee

Composition of Stakeholders Relationship Committee

Functions of the Stakeholders Relationship Committee

Composition of Risk Management Committee

Risk Management Committee – Key functions

CSR Committee

Applicability

Composition of the Board

CSR Reporting

Strategy Planning Committee

Obligation of the Companies under Companies (CSR Policy) Rules, 2014

Composition of the Committee

Review Questions

Chapter 10: Nclt, Nclat and Special Courts

The National Company Law Tribunal [ Nclt ]

Characteristic Features of NCLT

Jurisdiction of the NCLT

Powers of NCLT

Additional Powers

Penalties for Non-compliance

NCLT - Technical Functions

Freezing the Assets of a Company

Nclt Rules 2016

Functions of President, Registrar and Secretary

Functions of the Registrar

Dr. V. Balachandran is Former Dean, School of Business Studies and Professor and Head, Department of Management Studies, Central University of Kerala and was Former Senior Professor and Head, and Dean, Faculty of Management, Alagappa University, Karaikudi. He is a Fellow Member of the Institute of Company Secretaries of India. He has over 38 years of PG level teaching experience and is a well-renowned researcher and Research Supervisor.