TAMIL NADU NATIONAL LAW UNIVERSITY

(A University established under the Tamil Nadu Act No. 9 of 2012)

Dindigul Main Road, Navalurkuttapattu
Tiruchirappalli 620 027
Tamil Nadu, India

B.A. LL.B. (H) / B.COM. LL.B. (H)

COURSE SYLLABUS

CORPORATE LAWS I

General principles of contracts as well as law relating to certain special contracts of personal
relationships such as agency and partnership based on trust and good faith have been
covered in the previous semesters. Company contract is a special contract yet different from
that of agency and of partnership. A company is an artificial legal person, recognized as such
by law, with certain legal capacity and perpetual succession. It is different from that of the
people who constitute it. Management and capital provision are separated. Even if the capital
providers are the managers, they are agents of the company and not the company itself. Also
capital may be brought by a vast majority of the persons.
Under these special circumstances, there are many rules to be observed and adhered to from
formation stage to dissolving of a company. As recently as 2008, the Limited Liability
Partnership law became the reality and now LLP is also an artificial legal person. But
contracting is not the only way by which a company or LLP may be brought into existence.
We will study the law relating to statutory corporations as well. The subject of corporate laws
is therefore vast and taught in two papers, viz. Corporate Laws - I and Corporate Laws - II,
in semesters V and VI respectively, of the B.A./B.Com. LL.B.(Hons) Courses.

Course Objectives
This course is aimed at making the students the best transactional/litigating corporate
lawyers, regulators, highly sensitive thinkers capable of influencing the economic well being
and posterity of the country while being able to effectively contribute in achieving social and
economic justice as envisioned in the Constitution. In order to fulfill the above object, it’s
imperative for the students to have conceptual clarity as well as the ability to think critically
and evaluate the existing framework with respect to its need, scope, adequacy and future
requirements. Corporate Laws I course is designed keeping the above objects in mind. The
functional understanding of the promotion and registration of company and LLP, corporate
finance, rights and obligations of a capital provider and adjudicatory mechanism under the
corporate laws are to be covered in Corporate Laws I. Laws relating to the (company)
management etc. are to be covered in Corporate Laws II.
Reasons and justifications for rules relating to the above mentioned aspects of company shall
be discussed in adequate detail so as to ensure that the students develop independent
thinking, critical analysis and evaluating the existing domain knowledge and in order to
facilitate the same critical, evaluative and comparative approaches are to be used in studying
Corporate Laws I. The standard shall be comparable to the best of the national and
international law schools. To develop an understanding of the formation, registration of
companies and regulation of companies, relevant provisions of the Companies Act, 1956,
including schedules, rules, departmental circulars, clarifications and notifications made
thereunder, their interpretation through decided case laws, scholarly theoretical material,
journal review articles, post independence corporate law developments including the review
of company law by the JJ Irani Committee and the Limited Liability Partnership Act, 2008
would form part of the study material which are listed under the specific modules in the
following pages. In addition to the Companies Act, 1956, relevant provisions of legislations
relating to securities market and foreign exchange management would also be discussed in
brief.
Learning Outcomes:

1. To understand the historical development of corporation and regulation of

corporations by State
2. To appreciate the scheme of registration of the corporations and the rationale behind
various statutory requirements
3. To know the limitations of the authority of a company and the system of checks and
balances
4. To understand and appreciate the extent of the civil, criminal and tortuous liability of
a company
5. To examine the nature, scope and the constitutional validity of adjudicatory
mechanism under the Companies Act, 2013 and it’s functioning
6. To understand how corporate finance is being regulated by the state
 7. To understand the statutory rights and obligations of a capital provider
8. To understand and to evaluate the regulation of stakeholders’ interface and the
interface between the company and the stakeholders

Teaching Methodology

Corporate Laws – I will be taught by a combination of lectures and classroom discussions.

Being a branch of law essentially made of various statutes and decided cases the
interpretation of various statutory provisions and case laws will be an integral part of
teaching. Students are expected to read the full judgments in advance in order to participate
in the class room discussions. As part of project writing exercise, ample scope would be
made available to the students for their self learning, critical thinking, creativity and
development of research skills and techniques.

Assessment

Mid-semester (open book) as well as end-semester (closed book) shall be written exam. In
case of open book exam, the questions will be problem based. This is aimed at checking the
in-depth knowledge and analytical as well as advocacy skills of the students in the subject.
In case of closed book exam, a combination of problem as well as theory based questions
will be given. This will test, in addition to the skills as mentioned under mid-semester exam,
the retaining capacity as well as the recalling ability of candidates.
Students are strongly advised to read the full text of case laws from the reports which would
enable them to solve the legal problems in the exams. In case of closed book examination,
only the Bare Act (without any commentary or short notes or both) is allowed in the
examination hall.

Course Summary

Corporate Laws – I deals with promotion and incorporation by registration, consequences of

incorporation, interpretation of the constitutional documents of companies, adjudicatory
bodies, financial structure, raising of equity capital including issue of prospectus, allotment
of shares and certificates, depositories, transfer/transmission of shares and membership
rights. Cross reference will be made to the extent the Companies Act, 2013 applies to the
LLP.
The topics for this course are divided into five modules and ten units.
NOTE: All students SHALL keep their own copy of the bare Companies Act, 2013 as
amended up to date during the class hours. Alternatively, one may use the corporate
laws manual published by any of the publishers.

MODULE 1

UNIT 1 - INTRODUCTION
 Nature of business organisation and kinds of business organisations
 Corporation – nature and definition; Types and the historical development of
incorporated companies; emergence of principle of limited liability
 Companies under the Companies Act, 1956; Limited Liability Partnership (LLP)
 Features of company and Limited Liability Partnership
 Differences between a Partnership under the 1932 Act and a Company/LLP
 Development of Company Law in England and India
 Major Amendments to the Companies Act, 2013
• Producer Companies
• Board of Company Law Administration; Company Law Board
• NCLT and NCLAT
UNIT 2 – SPECIAL CONTRACTS RESULTING IN BODY CORPORATES
 Promoters– meaning, position, duties and liabilities
 Memorandum of Association and Articles of Association: Meaning, Significance and
Contents
 Scope and Significance of Modern Company and LLP Contracts
• Parties to the contract and other stakeholders
• Registration and Incorporation of Companies
• Resultant Body Corporate : Nature and Meaning
• Identification of Legal Relationships amongst the stakeholders inter se, if any,
and between the stakeholders and the company
 Registered office and publication of name
 Certificate of Incorporation
  Certificate of Commencement of Business
 An Overview of the Structure of Company and LLP Laws
• Structure of Corporate Law
• Protection of Stakeholders’ Interest under the Corporate Law
• Freedom of Contract vis-à-vis Corporate Law
 Select Special Features of Company Contract
 Concept of Corporate Personality and other associated features
 Doctrine of Lifting of Corporate Veil
 Concept of Limited Liability
 Exceptions to Limited Liability

MODULE 2

UNIT 3 – ADJUDICATORY BODIES

 Ordinary Civil Courts : Jurisdiction in relation to company matters
 High Court : Original and appellate jurisdiction in relation to company matters
 Company Law Board : Structure and Composition, Significance, Jurisdiction, Powers
and Functions
 NCLT and NCLAT : Creation, Scope, Significance, Jurisdiction, Powers and
Functions
 Recent changes in the mechanisms
UNIT 4 – INTERPRETATION AND ALTERATION OF MEMORANDUM AND ARTICLES
 Interpretation of MoA and AoA
 Alterations in Memorandum of Association and in Articles of Association
 Restrictions on such Alterations
 A Comparative Analysis of MoA and AoA
 Conflict between MoA and AoA
 Distribution of corpora authority
UNIT 5 – CORPORATE THIRD PARTY DEALINGS AND LIABILITY
 Corporate Control
 Company Third Part Contracts and Contractual Capacity
  Rules of Attribution
 The doctrines of constructive notice, indoor management and ultra-vires
 Pre-incorporation, preliminary and post-dissolution contracts
 Corporate Criminal Liability
 Corporate Tortuous Liability
 Corporate Liability v. Limited Liability: A Social Cost Analysis

MODULE 3

UNIT 6 – FORMATION OF CAPITAL AND RAISING OF EQUITY CAPITAL

 Concept of capital and financing of companies
 Kinds of capital and Contracts to subscribe for shares
 Classes and types of shares; equity with differential rights.
 Issue of shares at par, premium and discount.
 Private Placement and Statement in lieu of Prospectus
 Information Memorandum: Contents and Registration
 Public Issue
 Prospectus:
 Meaning, Definition and Kinds
 Abridged prospectus
 Red-herring prospectus
 Shelf prospectus
 Contents and Registration
 Misrepresentations in prospectus and civil and criminal liability for such
misrepresentations.
 Allotment of Shares
 Minimum Subscription Requirement
 Dematerialisation and rematerialisation of securities
 Cost v. Benefit of demat form
 Share certificates and share warrants.
  Call on shares.
 Forfeiture and surrender of shares.
 Bonus issues; rights issues; issue of sweat equity shares.
 Private placement
 Qualified Institutions Placement
UNIT 7 – DEBT CAPITAL
 Borrowings: Meaning, Types
 Loans from Banks and Financial Institutions
 Debentures: Characteristics and Kinds
 debenture stock, bonds
 Debenture trust deed and trustees
 Contracts to subscribe for debentures and other securities excluding shares
 Conversion of and redemption of debentures
 Issue of Debentures and Charges
 Debt Capital and Company Charges
 Securing of debts– creation, modification and satisfaction of charges
 Kinds of Charges: Fixed and Floating
 Perfection of Charges
 Crystallisation of Floating Charges and its effects
 New developments in corporate debt financing
 Reconstruction of Financial Assets
 Asset Management Companies
 Enforcement of Security Interest

MODULE 4

UNIT 8 – TRANSFER AND TRANSMISSION OF SHARES

 Transfer of Shares
 Transfer Procedure in physical mode; Share Certificates, Uncertified
Shares
  Transfer Procedure in Depository mode
 Forged or Fraudulent Share Transfers
 Transmission of Shares
 Nomination
 Share Warrants
 Warranties and indemnities on Share Sales
 Overview of dealings in Securities in Secondary Market
 Companies’ lien on shares

UNIT 9 - MEMBERSHIP RIGHTS, CLASS RIGHTS, MINORITY PROTECTION

 Membership Rights; Statutory and Contractual Rights
 Class Rights and Alteration of Class Rights
 Oppression and Mismanagement – Meaning, scope, locus standi; powers of
NCLT/NCLAT and of the Union government
 Remedies available for shareholders

MODULE 5

UNIT 10 – MAINTENANCE OF CAPITAL

 Rule relating to the maintaining of share capital for the benefit of the company, its
members and its creditors.
 Alteration of share capital
 Reduction of capital
 Buy-back of shares

REFERENCES

STATUTORY MATERIALS
1. The Companies Act, 2013
2. The Limited Liability Partnership Act, 2008
3. The Securities and Exchange Board of India Act, 1992
4. The Securities Contract (Regulation) Act, 1956
5. The Depositories Act, 1996
 6. The Banking Companies Act, 1949
7. The Foreign Exchange Management Act, 1999
8. Other relevant Rules, Regulations and By-Laws issued from time to time
BOOKS
1. Y.V. Chandrachud (2004), A. Ramaiya Guide to Companies Act, Lexisnexis
Wadhwa, Nagpur.
2. A.A. Berle and G.C. Means (1991), The Modern Corporation and Private Property,
Transactional Publishers.
3. Brian R. Cheffins (1997), Company Law: Theory, Structure, and Operation,
Clarendon Press, Oxford.
4. Eilís Ferran, Company Law and Corporate Finance, OUP,1st Indian Edition, 2003.
5. John H. Farrar, Farrar’s Company Law, Butterworths, London
6. Majumdar and Kapoor (2008), Company Law and Practice, 13 th ed., Taxman.
7. Nicholas Bourne on Principles of Company Law (1998), 3 rd ed., Cavendish
Publishing Ltd.
8. Palmer’s Company Law, Stevans, London.
9. Paul L. Davies and Sarah Worthington (2016), Gower and Davies Principles of
Modern Company Law, Sweet and Maxwell, London.
10. Robert R. Pennington (2001), Pennington’s Company Law, (8th Ed.) London:
Butterworths.
11. Ross Grantham and Charles Rickett, Corporate Personality in the 20 th Century, Hart
Publishing, Oxford, 1998.
12. Stephen M. Bainbridge (2002), Corporation Law and Economics, Foundation Press.
13. Susan Barber (2003), Company Law, Old Bailey Press, London.
COMMITTEE REPORTS
 The Report of the Committee on Company Law Amendment, 1945. (Cohen
Report)
 Report of the Company Law Committee, 1962. (Jenkins Committee)
 Report of the JJ Irani Committee on Company Law, 2002.
Note: Other readings and list of cases shall be given in the detailed syllabus.
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