Company Law

A Company is a corporate body and an artificial person with perpetual succession having legal personality and independent status separate from that of the members with limited liability constituting it.

The word company is derived from the Latin word (com means together; panis means bread) and it originally referred to an association of persons who took their meals together.

A company may be incorporated (corporation) or an unincorporated company. An incorporated company is a single and legal artificial person distinct from the individual constituting it, whereas unincorporated company such as partnership is an aggregation of individual.

TYPES OF COMPANIES
Under the (Indian) Companies Act 1956 only 3 types of companies can be registered, viz.
i) Public company
ii) Private company
iii)Producer company

Public limited Company
Public limited Company is one which;

i) is not a private company

ii) has minimum authorized Share Capital of Rs 5 lacs/- or more than the amount prescribed for the Minimum paid up capital.

iii) shall have at least 7 subscriber to Memorandum of Association and Article of Association.

Explanation:
Subscriber can be any person, who undertakes to contribute to the share capital of the company. According to section 254 of the Indian Companies Act, 1956 subscribers of MOA, who are individuals shall be deemed to be the directors of the company, until the directors are duly appointed in accordance with the provisions of section 255 of the said Act.

Private limited Company
Private limited Company is one which;

i) has minimum authorized Share Capital of Rs 1 lacs/- or more than the amount prescribed for the Minimum paid up capital.

ii) by its Article of Association:

a) restricts the right to transfer its shares, if any:

b) shall have at least 2 subscriber to Memorandum of Association and Article of Association and limits the member to 50 which will not include who are and who were employees of the company

c) prohibits any invitation to the public to subscribe for any shares or debentures of the company

d) prohibits any invitation or acceptance of deposits from the persons other than its members, directors or their relatives.

Producer Company
Producer Company consists of primary producers of agriculture produce and handlooms, handicrafts and cottage industries and producers institutions as members or may be converted from a multi state co-operative society. Such a company shall be a private limited company but shall have minimum 10 individual producers or 2 or more institutions or a combination of 10 or more individuals and producers institutions as member and will be governed by the provisions in chapter IX A of the Act

These companies may further be classified as follows:
i) Companies limited by shares
ii) Companies limited by guarantee with or without share capital
iii) Unlimited Companies with or without share capital

A) Companies limited by shares
Generally commercial, trading, and industrial; companies are incorporated as limited by shares. The authorized share capital of such company is divided into shares of a definite amount called as per value or nominal value of share. Authorized share capital may comprise more than one kind of share such as Equity shares and preference shares.

B) Companies limited by guarantee with or without share capital

i) Companies limited by guarantee with share capital
Such companies are usually in the field of association of traders for trade protection and collection of relevant data and information or of association formed for entertainment and promotion of cultural activities which are established for rendering services to members and not for earning profits. Such companies may also have share capital whenever necessary.

ii) Companies limited by guarantee without share capital
Companies limited by guarantee without share capital are exactly similar in nature to the guarantee companies referred to above except there will be no share capital.
C) Unlimited Companies with or without share capital

Every member of such company is jointly or severally liable for all the debts and liabilities of the company. Such companies may also have share capital like some guarantee companies although they are not bound to do so.

Difference between a listed company and an unlisted company
A listed company means a public limited company whose shares have been listed in any Stock Exchange in India. The Stock Exchanges which are of significance are the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). Both listed and unlisted companies can issue shares. Shares of a listed company can be traded through an online mechanism, whereas shares of an unlisted company can be traded manually.

Procedure for Registration of Company In India.
Indian companies Act, 1956 lays down the rules for the establishment of both Private and Public Companies in India

Allotment of Director Identification Number

Application in Form DIN-1 shall be made online and provisional DIN No. of the person intended to become the director of the company shall be generated

(A) NAME APPROVAL
1. Four names should be selected in order of preference indicating the object of the company.

2. Proposed name should not resemble the name of already registered or existing company and it should not contain the words like “Stock Exchange”.

3. Proposed name should not contravene the provisions of Emblems and Names (Prevention of Improper use) Act,1950.

4. It should not have words such as “Mutual Fund” otherwise it would be registered as mutual fund company.

5. Names starting with small alphabets may be registered but it should not have phonetic or visual resemblance to name of any other registered Company.

6. Proposed name should be verified to check the availability by following the guidelines issued by the Central Government.
To check the availability of the name proposed, one should apply to Registrar of Companies (ROC) of the State with in which he/she wants to register the Company.

Within 7 days of application, ROC intimate the concerned person regarding the availability of the name and if the proposed name is not available and consequently it is refused, then one should check the reason for objection and if with in 30 days of such refusal the said objections are rectified and written back to ROC.

(B) MEMORANDUM OF ASSOCIATION (MOA) AND ARTICLE OF ASSOCIATION (AOA)
1. Both MOA AND AOA should be divided into paragraphs and numbered consecutively and in order to avoid alteration and modification these should be verified with ROC before finalization and should be printed.

2. If the shares of the proposed company are desired to be listed at Stock Exchange then AOA of such company should contain the provisions which Stock Exchange generally requires.

3. MOA and AOA should be stamped according to Indian Act or State Act or as per the provisions of the notification presently enforce as the case may be.

4. MOA and AOA should be duly signed by all the subscriber to it in presence of one witness and following details should be mentioned by the subscriber and witness in such MOA and AOA.
Name
Father’s name
Occupation
Address
No. of shares subscribed for
An agent of a subscriber can also subscribe the above said documents duly authorized by power of attorney. Both these documents will then be dated.

(C) REGISTRATION OF PUBLIC LIMITED COMPANY
Draw the demand draft in favor of ROC of the concerned state and the amount of registration and filing fees may vary from Rs 4000/- to Rs 2 crores depends on the amount of the Authorized capital of the Company. Following documents are required to be filed at the time of registration
1. The stamped and signed copy of MOA and AOA of the proposed company along with 2 extra copies.

2. Any other agreement referred to in MOA and AOA which can form the part of it.

3. An agreement which the company proposes to enter into with any individual to be its managing or whole time director or manager.

4. Original copy of the ROC’s letter intimating about the availability of the name.

5. The forms mentioned herein under:
a) Form No. 29 i.e. consent of any person to act as a director is required to be filed with ROC.

b) Undertaking to take and pay the qualification shares is required in case
(i) Where share qualification for directorship is required
(ii) Person named as director in AOA has not subscribed the AOA and MOA for shares at least equal to his qualification shares. (Form 29)
c) Deceleration of compliance in Form 1A by any Advocate or any pleader or attorney of High Court and Supreme Court or by any Chartered Accountant etc.

d) Form No 18 (notice of situation of registered office of the company).

e) Form No 32 (Particulars of directors, manager or secretary).
ROC will then register the company and issue the certificate of incorporation on which there will be a 21 digit Corporate Identity Number (CIN).Date given on certificate of incorporation by the ROC will be the date of incorporation of the company and on that date the company will come into being as a separate legal entity.

Public Limited Company on being registered cannot commence business so long it does not obtain Certificate of Commencement of Business.

GLANCE SUMMARY
To sum up, a company is formed by registering the Memorathe demand draft in favor of ROC of the concerned state and the amount of registration and filing fees may vary from Rs 4000/- to Rs 2 crores depends on the amount of the Authorized capital of the Company. Following documents are required to be filed at the time of registration
1. The stamped and signed copy of MOA and AOA of the proposed company along with 2 extra copies.

2. Any other agreement referred to in MOA and AOA which can form the part of it.

3. An agreement which the company proposes to enter into with any individual to be its managing or whole time director or manager.

4. Original copy of the ROC’s letter intimating about the availability of the name.

5. The forms mentioned herein under:
a) Form No. 29 i.e. consent of any person to act as a director is required to be filed with ROC.

b) Undertaking to take and pay the qualification shares is required in case
(i) Where share qualification for directorship is required
ndum and Articles of Association with the Registrar of Companies of the State in which the main office of the proposed company would be located. After the duly stamped Memorandum of Association and Articles of Association, documents and forms are filed and the filing fees are duly paid, the ROC scrutinizes the documents and, if necessary, instructs the authorized person to make necessary corrections. The ROC grants the certificate of incorporation after the required documents are presented along with the requisite registration fee, which is scaled according to the share capital of the company, as stated in its Memorandum. Thereafter, a Certificate of Incorporation is issued by the ROC and the company officially comes in to existence w.e.f the date shown on this certificate. It usually takes one to two weeks from the date of filing Memorandum of Association and Articles of Association to receive a Certificate of Incorporation. As a recent development in incorporation procedures, various forms and applications under Companies Act, 1956 and the Rules and Regulations are being facilitated through e-filing which is projected by Ministry of Company Affairs.