Companies Act

 What is a company?
Company means a company incorporated under the companies Act, 2013 or under
any previous companies act.

Public company V/S Private company

Point of difference Public Co. Private Co.

1) No. of members Minimum- 7
Maximum- No limit
2) Source of funds Can invite general public to
subscribe for the shares
3) No. of Directors At least 3
4) Minimum Capital Must have a minimum paid-
up capital of ₹5,00,000
5) Use of specific words Must use the word “limited”
with its name
Minimum- 2
Maximum- 200
Cannot invite general public
to subscribe for the shares
At least 2
Must have a minimum paid-
up capital of ₹1,00,000
Must use the word “ private
limited” with its name

 What is a holding Company and Subsidiary Company?

A company is known as the “holding company” if it holds more than 50% stake in any
other company. It is also known as the “parent company”. The other company is
known as “subsidiary company”.
For example:- A will be the subsidiary of B if, B has more than 50% shareholding in A.
B will be considered as A’s holding company.

 What is Government Company?

A company in which not less than 51% of paid-up share capital is held by the central
government or the state government or partly by central government and partly by
state government is known as a government company. A subsidiary of a government
company is also considered as a government company.
 What is a Foreign Company?
A company which is registered outside India but conducts any business activity in
India in any manner is considered as foreign company.

 What is Memorandum of Association (MOA)?

It is the most important document of the company. It is the charter of the company. It
lays down the area of operation of the company. It states the power and objectives of
the company. It also regulates the external affairs of the company in relation to
outsiders. Any action outside the scope of the Memorandum will be Ultra Vires (beyond
powers) of the company & so void. Following are the contents of memorandum

1) The Name Clause 4) The Liability Clause

2) The Address Clause 5) The Capital Clause
3) The Object Clause 6) The Association Clause

 What is Article of Association (AOA)?

Article of Association are the rules, regulations & the byelaws for the internal
management of the company. They are like partnership deed in a partnership. It is the
 second most important document after MOA of a company. The various rules &
regulations are framed for the purpose of carrying out the objects of the company as
stated in the MOA. Thus it can be said that AOA are subordinate to MOA of the
company. The Articles cannot succeed the objects as set out in MOA.

 Process of incorporation of the company

1) To make an application for the name of company
2) Submit MOA & AOA to the Registrar Of The Company
3) Submit address of company at Registrar Of The Company
4) Make the payment of the minimum amount at which company is to be registered
to the Registrar Of The Company

 Types of meetings
1) Annual General Meeting (AGM)
2) Extraordinary General Meeting (EGM)
3) Statutory Meeting
4) Board of directors meeting

 Annual General Meeting (AGM)

Every company is required to hold an annual general meeting. In case of the first AGM,
it shale be held within 9 months from the date of closing of the first financial year of
the company. For holding an AGM a notice should be given to each and every member
before 21 clear days (23 days i.e. inclusive of 2 days for postage) of meeting. The notice
must have information about the timings of the meeting (business hours i.e. 9 00 A.M.
to 6 P.M.) & the day that is not a national holiday. The meeting will be held at the
registered office of the company or at some other place within the city, town or village
in which the registered office is situated.

 Types of Directors
1) First Directors
The first directors of the company are to be appointed by the subscribers
of the MOA. If such appointment is not made then the subscribers who are
individuals become directors. The first directors hold the office up to the
date of first AGM of the company.
2) Alternate Directors
Alternate director may be appointed by a company by a resolution if an
independent director is absent from India for a time period of more than 3
years. The term of alternate director cannot be longer than the term of
director in whose place he has been appointed. Also he will have to vacate
the office if and when the original director returns to India.
3) Nominee Directors
He is ta director nominated by any financial institution for the time being
or an agreement or appointed by any Government or any other person to
represent its interest.
4) Independent Directors
Any director other than the managing directors, a whole time director and
a nominee director. Such a director should not have any significant
relationship with the company. A total of 1/3rd of the total no. of directors
should be independent directors.