POWERPOINT Company Law Presentation.pptx

POWERPOINT Company Law Presentation.pptx

1. THE Companies act , 2013 Kartik Singh Bcom(hons) 1293

2. contents DEFINITION OF A COMPANY DEFINITION OF A BODY CORPORATE CHARACTERISTICS OF A COMPANY REGISTRATION OF A COMPANY COMPANY VS PARTNERSHIP FIRM PRINCIPLE OF SEPRATE LEGAL ENTITY BENEFITS OF SEPRATE LEGAL ENTITY TEST OF SEPRATE LEGAL ENTITY LIFTING OF CORPORATE VEIL

3. DEFINITION of a company SECTION 2(2)- Company means a company incorporated under this act or any other previous company law. However, this definition does not highlight the characteristics of company form of organization. Hence, the following definitions given by various authors can be used to understand the true meaning of a company:- LORD JUSTICE LINDLEY- "A company is an association of many persons who contribute money or monies worth to a common stock and employed in some trade or business and who share the profit and loss arising therefrom. The common stock so contributed is denoted in money and is the capital of the company. The persons who contribute to it or to whom it pertains are members. The proportion of capital to which each member is entitled is his share. The shares are always transferable although the right to transfer is often more or less restricted."

4. DEFINITION of a company PROF. HANEY- " A company is an artificial person created by law, having separate entity, with a perpetual succession and common seal .“ JUSTICE MARSHALL- "A corporation is an artificial being, invisible, intangible, existing only w contemplation of the law. Being a mere creation of law, it possesses only the properties which the Charter of its creation confers upon it, either express or as incidental to its very existence .“ Thus, it can be said that a company is an artificial legal person created by law having perpetual succession.

5. DEFINITION of a BODY CORPORATE The term 'body corporate' is wider than the term 'company. It includes LLPs (including Foreign LLPs), Company (including Foreign Company), Statutory Company, Nationalized Banks and Public Financial Institutions . SECTION 2(11)- "Body Corporate" or "Corporation" includes a company incorporated outside India, but does not include : a co-operative society registered under any law relating to co-operative societies; and any other body corporate (not being a company as defined in this Act), which the Central Government may, by notification, specify in this behalf.

6. Characteristics of a company

7. REGISTRATION OF A COMPANY Company comes into existence through registration under the Companies Act and becomes a separate legal entity. Registration is mandatory for a company to come into existence. SECTION 9- on registration, the company shall be a body corporate by the name contained in the memorandum, capable of exercising all the functions of the incorporated company under this Act and having perpetual succession with power to acquire, hold and dispose of property, both movable and immovable, tangible and intangible, to contract or to sue and to be sued, by the said name . Thus, the concept of Separate Legal Entity gets established.

8. COMPANY VS PARTNERSHIP BASIS COMPANY PARTNERSHIP FIRM REGULATING ACT The Companies Act, 2013 The Partnership Act, 1932 SEPRATE LEGAL ENTITY Yes, it is a separate from its members. No, it is not a separate legal entity. REGISTRATION Registration is mandatory for the creation of a company . Registration is optional, but it is advised to do so. PERPETUAL SUCCESSION The death, insanity or retirement of a member does not effect the existence of company. The partnership firm shall dissolve upon the death or retirement of a partner unless agreed otherwise. LIABILITY Liability of each member is limited to the extend of unpaid amount of shares allotted to them or the amount guaranteed by them. Liability of each partner is unlimited. MINIMUM MEMBERS Private : Min- 2 Max- 200 Public: Min- 7 Max- No limit Min- 2 Max- 50 OWNERSHIP AND MANAGEMENT Company is owned by its members but managed by Board Of Directors. Partnership firm is both owned and managed by the partners.

9. Principle of separate legal entity Separate Legal Entity: On registration the company acquires an entity different from the whole world. Reiterating SECTION 9 here , one may conclude that separate legal entity gets reflected in the following factors: Company can sue and be sued in its own name; Company can hold and dispose of property, both movable and immovable, tangible and intangible; Company can enter into contracts in its own name CASE LAWS- SALOMAN VS. SALOMAN & COMPANY LTD. LEE VS. LEE’S AIR FARMING LTD. ABDUL HAQUE V. DAS MAL

10. BENEFITS of separate legal entity

11. TEST of separate legal entity Test of Separate Legal Entity To determine whether an entity is separate from its members, courts typically examine:- whether the company has been duly incorporated under low whether the company has its assets and liabilities separate from its owners whether the company can enter contracts independently

12. LIFTING OF CORPORATE VEIL CORPORATE VEIL- According to the principle of independent corporate existence there exists a veil between company and the rest of the world. This corporate existence different from others is known as Concept or Doctrine of Corporate Veil. The entire edifice of company form of organization is based on the Corporate Veil . LIFTING UP THE CORPORATE VEIL- Company's acts are the acts of the company. Powers of company are defined and confined by its Memorandum of Association. Those who form and manage the company are supposed to form and run the company bona fide in the best interests of the company and work within the powers of the company . Whenever the corporate entity is wrongly used to defeat the purpose of law or for personal gain, the corporate entity shall be ignored and the wrong-doers shall be made to pay for their wrong doings. Wherever the 'Separate Corporate Entity' is disregarded or ignored to see behind the obvious and question the real intentions of the persons involved, it is known as 'Lifting up the Corporate Veil.

13. LIFTING OF CORPORATE VEIL