Contents

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Preface I-5
Syllabus I-7
Chapter-heads I-9

UNIT I
INTRODUCTION

CHAPTER 1
THE COMPANY AND ITS CHARACTERISTICS

u Definition of a Company 3
u Registration and the Effect of Registration 4
u Characteristics of a Company 4
u Journey of the Companies Act so far 8
u Concept of Corporate Veil or Doctrine of Separate Legal Entity 13
u Lifting up (or Piercing) the Corporate Veil 13
u Meaning of Body Corporate 17
u Public Financial Institution 17
u Illegal Association (Sec. 464) 17
u Improper use of term ‘Limited’ or ‘Private Limited’ as part of Name 18
or Title (Sec. 453)
u Applicability of the provisions of the Companies Act 18
QUESTIONS 21
PRACTICAL PROBLEMS 21

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CHAPTER 2
ADMINISTRATION OF COMPANY LAW

u Administrative set-up for the Company Law 23

u Some Important Mechanisms in the Functioning of the Companies 24
Act, 2013
u National Company Law Tribunal and its Constitution (Sec. 408) 24
u National Company Law Appellate Tribunal and its Constitution 26
(Sec. 410)
u Special Courts 30
u National Financial Reporting Authority (NFRA) 31
u Serious Fraud Investigation Office (SFIO) 31
u Indian Institute of Corporate Affairs (IICA) 31
QUESTIONS 32

CHAPTER 3
TYPES OF COMPANIES

u Classification on the basis of liability 33

u Classification on the basis of specifications in Articles of Association 34
u Difference between private company and public company 34
u Classification on the basis of size 37
u Classification on the basis of extent of control in terms of Voting 41
Power
u Company on the basis of Government Shareholding 43
u Classification on the basis of Place of Incorporation 45
u Classification on the basis of Activity Status of Company 49
u Classification on the basis of mode of formation 51
u Companies on the basis of objective 51
u Difference between producer company and private company 56
u Classification on the basis of listing status 58
QUESTIONS 60
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CHAPTER 4
FORMATION OF COMPANY

u Promotion 61
u Process of Formation or Incorporation of Company (Sec.7) 65
u Online Registration of a company 66
u Commencement of Business, etc. (Sec. 10A) 70
QUESTIONS 71
PRACTICAL PROBLEMS 71

UNIT II
DOCUMENTS AND SHARES

CHAPTER 5
MEMORANDUM OF ASSOCIATION

u Memorandum of Association [Sec. 2(56)] 75

u Doctrine of Ultra Vires 78
u Alteration of Memorandum of Association 79
QUESTIONS 82

CHAPTER 6
ARTICLES OF ASSOCIATION

u Articles of Association [Sec. 2(5)] 83

u Contents of Articles (Sec. 5) 83
u Alteration of Articles of Association (Sec.14) 84
u Doctrine of Indoor Management (Turquand Rule) 87
u Difference between Memorandum of Association & Articles of 88
Association
QUESTIONS 89
PRACTICAL PROBLEMS 89
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CHAPTER 7
PROSPECTUS

u Prospectus [Sec. 2(70)] 91

u Meaning of Mis-Statement in Prospectus 94
u Remedies for Mis-statement in Prospectus 96
QUESTIONS 99
PRACTICAL PROBLEMS 99

CHAPTER 8
ISSUE AND ALLOTMENT OF SHARES

u Meaning of Share 101

u Meaning of Allotment 108
u General Principles as to Allotment 108
u Statutory Provisions with Regard to Allotment 108
u Further Issue of Share capital (Sec. 62) 115
u Difference between Right Shares and Bonus Shares 116
u Buy-Back of Shares (Sec. 68) 116
QUESTIONS 120

CHAPTER 9
CALLS, FORFEITURE AND TRANSFER OF SHARES

u Requisites of a Valid Call 121

u Provisions Regarding Calls on Shares 121
u Forfeiture of Shares (Regulations 28 to 32 of Table F) 122
u Transfer of Shares (Sec. 56) 123
u Transmission of Shares (Regulations 23 to 26 of Table F) 126
u Difference between Transfer and Transmission of Shares 127
QUESTIONS 129
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CHAPTER 10
MEMBERSHIP OF COMPANY

u Introduction 130
u Member 130
u Member v. Shareholder 131
u Who may be a Member 131
u Termination of Membership 133
u Rights and Liabilities of Members in brief 133
QUESTIONS 134

UNIT III
MANAGEMENT AND MEETINGS

CHAPTER 11
COMPANY MANAGEMENT

u Introduction 137
u Director 137
u Woman Director 140
u The Concept and Number of Independent Directors 141
u Small Shareholders’ Director (Sec. 151) 144
u Director Identification Number (DIN) 146
u Appointment of Directors (Sec. 152) 149
u Duties of Directors (Sec. 166) 154
u Meetings of the Board (Sec. 173) 157
u Powers of Directors (Sec. 179) 162
u Managerial Personnel 165
u Difference between Managing Director and Manager 166
u Difference between Managing Director and whole time Director 166
QUESTIONS 169
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CHAPTER 12
MEETINGS AND REQUISITES OF VALID MEETING

u Introduction 170
u Annual General Meeting (Sec. 96) 170
u Difference between ordinary business and special business 173
u Extraordinary General Meeting 174
u Requisites/Essential Conditions of Valid Meeting 176
u Difference between ordinary resolution and special resolution 182
u Postal Ballot 183
u Voting through Electronic Means (E-Voting) 185
QUESTIONS 190
PRACTICAL PROBLEMS 190

UNIT IV
DIVIDENDS, AUDIT AND WINDING UP

CHAPTER 13
DIVIDEND

u Meaning of Dividend 195

u Provisions regarding Declaration and Payment of Dividend 195
u Investor Education and Protection Fund (Sec. 125) 198
u Concept of Interim Dividend 200
u Punishment for Failure to Distribute Dividend (Sec. 127) 200
QUESTIONS 202
PRACTICAL PROBLEMS 202

CHAPTER 14
AUDIT AND AUDITORS

u Introduction 203
u Powers of Auditors (Sec. 143) 207
u Resignation of Auditor [Sec. 140(2)] 208
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u Audit Report 209
QUESTIONS 212

CHAPTER 15
WINDING UP

u Meaning of Winding up 213

u Modes of Winding up 213
u Winding up by Tribunal (Sec. 270) 214
u Winding up under Insolvency and Bankruptcy Code, 2016 218
u VoluntaryWinding up (under Sec. 59 of IBC) and Process as per 221
Regulations, 2017
QUESTIONS 226
PRACTICAL PROBLEMS 226

UNIT V
DEPOSITORIES ACT, 1996

CHAPTER 16
DEPOSITORIES ACT, 1996

u Demat of Shares 229

u Depositories Act and Depository System 229
u Rightsand Obligations of Depositories, Participants, Issuers and 231
Beneficial Owners
u Powers of SEBI under the Depositories Act, 1996 233
u Process of Dematerialization, Rematerialization and IPO in demat 234, 235
form
QUESTIONS 236
u Bibliography 237
u B.Com. (H) - 2018, 2019 Semester-II 239, 242