Indain Companies Act

THE INDIAN COMPANIES ACT, 1956 BASIC CONCEPT 1. What is the meaning of a Company? The word company means an association formed by a number of persons for some common object. When such an association of persons is registered under the companies act, it becomes an artificial person with perpetual succession and common seal. 2. How is a company defined? According to sec. 3(1) (i) of the company act, 1956: A company is defined as, ‘a company formed and registered under this act or an existing company.’ An existing company means ‘a company formed and registered under any of the previous company laws.’ The definition given by the companies’ act does not define the company clearly as to its features. Chief Justice Marshall of U.S.A. has defined the term company, as ‘a company is a person, artificial, invisible, intangible and existing only in the contemplation of the law. Being a mere creature of law, it posses only those properties which the charter of its creation confers upon it either expressly or as incidental to its very existence.’ 3. 1. 2. 3. 4. 5. 6. 7. 8. 9. 4. What are the characteristics of the company? Incorporated Association: Under the Companies Act, a company must be registered or incorporated. The minimum numbers of persons required for incorporation are seven in case of public co. and two in case of private company. Artificial person: It is an artificial legal person enjoying same rights and owing same obligation as a nature person. Separate Legal Entity: A company is separate and distinct from the persons who constitute it. Limited Liability: the liability of its members is limited to the unpaid value of the shares held by them or guarantee given by them. Separate Property: Company is entitled to own and hold property as distinct from its members. Transferability of Shares: Shares of the company are freely transferable which makes the life of the company independent of the lives of its members. Perpetual Existence: A company being an artificial judicial...