LAW RELATING TO COMPANY

Presented by: Team Ignite

Chapter: Introduction
Company

Company is an association.

Formed by a number of person.

Has some common purpose

Registered according to the law
relating to company.
What is company ?

Formed and registered under the company acts.

Having some legal rights and obligation.

By the law conferred as a distinct legal personality.

With perpetual succession and a common seal.

therefore a comany is different from its members and

Origin of company law

British company act,1844

Joint stock company act,1850

Act relating to comapnies were passed 1860 to 1913

The act of 1913 remained in forced 1956

Objectives and purpose of company legislation:
Encourage investment.

Ensure due and proper administratin

Present malpractice by directors and managers

Arrange for investigation.

Essential feature of company

Voluntary
Registration Association

FEATURE

Legal Contractual
Personality capacity
Types of Companies
On the basis of Membership:

One man or Family

Private
Public
Types of Company
Unlimited Company :The Liability of the sharesholders is
unlimited.
Non-profit Company;
Holding Company;
Subsidiary Company;
Government Company;
Foreign Company;
How to convert Private Limited Company to Public
Limited Company
A private limited company can be converted to public limited
company , which is described in section 231 the Company Act
1994, first of all board of directors taking decision to convert
public company from existing private company.
For converting public company needs to add few conditions such
as:
1. At least seven shareholders and maximum shareholders
limited by shares.
How to convert Private Limited Company to Public
Limited Company (contd..)
2. Must be seven entrepreneurs set up the company.
3. No restriction to transfer the share and debenture of
the company through the Share market .
4. Company can invite people to purchase company's
share and debenture.
5. Have to arrange Statutory Meeting.
6. Have to at least three directors of the company.
7. End of the company name only add the word Limited.
Conversion
Procedure to convert private company into a public company:
By Resolution

By Default

By Creating a Statutory Public Company

Automatic Conversion
Conversion
Procedure to convert private company into a public company:
(continued..)

I. By Resolution:
A private company can be converted into a public company,
by passing a special resolution altering its articles to
eliminate the three restrictions on private companies;
filing with the Registrar, within 50 days, a prospectus or
statement in lieu of prospectus.
Conversion
Procedure to convert private company into a public company:
(continued..)

II. By Default:
A private company may become a public company,
If a private company fails to comply with the essential
requirements of a private company.
Conversion
Procedure to convert private company into a public company:
(continued..)

III. By Creating a Statutory Public Company:

Where 25% or more than that of the paid-up share capital of a
private company is held by one or more bodies corporate, the
private company shall become a public company.
Conversion
Procedure to convert private company into a public company: (continued..)

IV. Automatic Conversion:

Where the average annual turnover of a private company, whether in existence at the
commencement of th: Companies (Amendment) Act, 1974, or incorporated thereafter,
is not, during the relevant period, less than rupees one crore, the private company
shall, irrespective of its paid-up share capital, become, on and from the expiry of a
period of three months from the last day of the relevant period during which the
private company had the said average annual turnover, a public company by virtue of
this subsection.-43A(1A), Companies (Amendment) Act, 1974.

The term 'Turnover" means the aggregate value of the realisation made from the
sale of goods.
Conversion
Procedure to convert private company into a public company: (continued..)

IV. Automatic Conversion:

Where the average annual turnover of a private company, whether in existence at the
commencement of th: Companies (Amendment) Act, 1974, or incorporated thereafter,
is not, during the relevant period, less than rupees one crore, the private company
shall, irrespective of its paid-up share capital, become, on and from the expiry of a
period of three months from the last day of the relevant period during which the
private company had the said average annual turnover, a public company by virtue of
this subsection.-43A(1A), Companies (Amendment) Act, 1974.

The term 'Turnover" means the aggregate value of the realisation made from the
sale of goods.
Conversion
Result of conversion:
A company loses its privileges.
The conversion doesn't change the incorporation of the
company.
A private company, formed by holding bodies corporate
is private in name only but it is actually public.
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