COMPANY LAW 1/21/2021

PRESENTED BY : CHARANJEET KAUR

PRESENTED TO : PARAMJIT KAUR
ROLL NO. : 4311

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✓ INTRODUCTION
✓ BACKGROUND AND HISTORY
✓ MEANING OF COMPANY
✓ AMENDMENT TAKE PLACE IN NEW
COMPANY LAW 2013
✓ NATURE AND MEANING OF COMPANY
✓ FEATURES OF COMPANY
✓ ADVANTAGES
✓ DISADVANTAGES
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INTRODUCTION
Sole proprietorship and partnership forms
of business organisation could not meet the
growing demand of a very big business, because
of their limitations such as :-
 Limited capital
 Limited Managerial ability
 Unlimited liability and other drawbacks.
Therefore, a company form of business
comes into existence to do, away with the defect
of sole proprietorship and partnership forms of
business organisation.
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BACKGROUND AND HISTORY

1. After run of around 56 years, the (Indian)
companies act, 1956 in now in the process of
being substituted by the new company law.
2. The new companies bill 2012 bill was approved
by the Lok Sabha (the lower house of india)on
18 dec 2012 and by the rajya sabha (the upper
house)on 9 Aug 2013 . The bill received
presidential assent on 29 August 2013 to
become law. The new company law 2013. this
law come into force 12 september 2013.

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Companies law 1956 is replaced with new

companies law 2013. Act contains 29 chapters,
470 Sections, and 7 Schedules. Act prescribes 33
new definitions.
2013 Act has introduced several new concepts
and definitions.
WHAT IS COMPANY ?
a company is a voluntary association of persons
formed through the process of law, for the
purpose of carrying on same business.
“A Company is an artificial person created
by law, having separate entity with a perpetual
succession and a common seal.” Footer Text
- Prof. Haney
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COMPASSION BETWEEN COMPANY LAW

1956 AND 2013
• Chapters:- 13

Company • Sections:- 658

• Schedules:- 15

law 1956 • Number of clauses in section

2:- 67

• Chapters:- 29
Company • Sections:- 470
• Schedules:- 7
law 2013 • Number of clauses in section 2
:- 95 Footer Text
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One Person Company

Financial year

Promoter

Board of director

Independent director

Financial statement

Women Director Footer Text

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AMENDMENT TAKE PLACE IN NEW

COMPANY LAW 2013
❖ PROMOTER :
1956 ACT it was totally ignored. Promoter is a
finder person of the company according to the new
law 2013. promoter has control over the affairs of the
company
❖ ONE PERSON COMPANY
Now there is a clause related to one person
company. It’s a private company having only one
member and at least one director. it may be a
dominant company, and a small association.
❖ BOARD OF DIRECTORS
There should be a mandatory to have one
board of director. There may be 2 to 15 maximum.

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❖ WOMEN DIRECTOR
In the previews company law there is no
provision about the women director. Every listed
company/public company with paid up capital of
Rs300 Cores or more shall have at least one
women director.
❖ ACCOUNTING YEAR
according to new company law 2013 every
company shall follow accounting year 1st April-
31st march.
❖ FINANCIAL STATEMENT

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❖ RESIDENT DIRECTOR :
Every company must have to stayed in
india for a total period of 182 days or more in
previous year.
❖ INDEPENDENT DIRECTOR
To align the company law with Clause
49 of equity listing. Every listed company is
required to have at –least one – third of the
total number of the total number of directors
as independent director. Director shall be
approved by the members.

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Meaning and Nature of Company

A Company is a voluntary association of
persons formed through the process of law, for
the purpose of carrying on some business with
the view of earn profit.
Definition of ‘company’
Section 2(20) of Companies Act, 2013,
defines a ‘Company is incorporated under this act
or under any previous company law, definition
does not explain the meaning of Company in
terms of its features as discuss some definitions
given by different authorities.
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Professor Haney :-
“A company is an incorporation association,
which is an artificial person created by law , having a
separate entity with a perpetual succession and a
common seal.”
The term ‘company’ involves two ideas :-
 That members of an association are so numerous as
it not possible to consider it as a firm.
 That the consent of all other members is not required
to transfer the interest of a member.
Mr. Marshal :-
Defined a company “as a person, artificial,
invisible, intangible, and existing only in contemplation
of law.” Footer Text
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A company ,thus may be understood as an

incorporation association which is an artificial
person, having separate legal entity with a
perpetual succession, a common seal ,a common
capital comprising transferable share and carry
limited liability.
 ‘Company is like river’– members may come
and go , but ,the company would remain and
continue forever.
 ‘King is dead, long live the king’ – meaning the
company never died like king.

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Incorporated Artificial Separate legal

association person entity

Separate
Limited liability Common seal
property

Separation of
Perpetual Transferable
ownership and
existence shares
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Nature of Company
➢ Incorporated association :
When a group of person are registered under
company act 2013. a company comes to exist but it
comes to life. After getting the certificate of
incorporation . Company comes into effect from the
date mentioned on certificate of incorporation and
from there on carry its operation. It means
corporation create a company.
➢ Artificial legal person :
Company is an artificial person because it is
formed by law . Company is invisible, intangible but
not fictitious.
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➢ Separate legal entity :

The personality of a company is different from
those who created. This feature is the back bone of
company law. The company has its own identity.
CASE : lee v/s lee’s Air farming Ltd.
 The Company name is lee’s Ltd. Lee held in
2999/3000 shares.
 He was director of company and employed as a pilot.
He has major share .
 Lee has killed an accident while flying the company
plane.
 His wife claimed compensation. It was said by
company that no compensation should be given as lee
and lee’s air farming ltd are some but the wife claim
was successful and it was said that lee’s air farming
ltd, was a separate person and the compensation was
payable. Footer Text
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➢Separate Property:
A company is capable of owing and selling of
property in its own name. company becomes the owners
of its capital and assets. It means the property of
company is of the company I am not the shareholder.
CASE Macaura v/s Northern Assurance Company Ltd
 It was a timber company .
 Macaura held all share except 1 and major creditor
of the company . He insured the company is timber in
his own name.
 The timber was lost in fire . The macaura the claim
compensation from the company.
 Assurance company was not liable to pay any
amount as the property of the company can only be
owned by co. timber belong to the co. not macaura.
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➢ Limited Liability :
It means the liability of the members is
limited only to the unpaid amount of the share
that they are holding . The liability of the
members of the company is limited by shares
or by guarantee. if company limited by
guarantee than liability extend to the amount a
number of guarantee to pay in case of winding
up.
➢ Transferable Share :
Under section 56 the shares of a public
company are freely transferable can be sold or
purchased.
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➢ Perpetual Succession :
It means that the company has continued
existence the life of the company is not
measured by the life of any member company is
an immortal person. The death or insolvency
doesn’t the corporate existence of the company.
A company is created by law , hence it can only
put to an end by the process of law.
➢ Common Seal :
A company is artificial person. hence it
cannot sign on its name on contract and show a
common seal is used as substitute for its
signature having the name of company and
graved on it or bound by any document bearing
the common seal. Footer Text
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➢Separationof ownership and

Management
A company is owned by a number of
shareholders which is too large a body to
manage the affairs of the company
shareholders appoint their agents or
representatives (called director) to manage
the operations of the company on their
behalf to pursue their objectives. The
separation of ownership and management
in the distinguished feature of the
company.
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Advantages of company law

➢ Corporate Veil
Veil means a curtain between the
company and its member of anything is
wrong members are not liable. The veil
act as protection of members. The
member are not personally liable for any
such act or omission. The veil protects
the members from the liabilities of the
company.
➢ Capacity to sue
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 Limited Liability :
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➢ Continuity :-
The continuity and stability of the
company is not affected by death,
insolvent, and insanity of its members.
➢ Transferability of shares :
Another main advantages of investing
money in a company is that an investor is
not wedded to a company forever . He can
sell his share as and when desired .this
trading of share is facilitated by stock
exchange.
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➢ Democratic set up :
Elected representative of
shareholders manage and control the
working of the company. The voting
power of the shareholder indirectly
controls the policies of the company.
➢ Large membership :
There is no restriction on the
maximum number of members a public
company can have opportunity to the
public at large to invest in company’s
shares. Footer Text
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Objectives of this law

 To encourage the investment in the
company.
 Full and fair disclosure .
 To ensure effective participation and
control.
 To empower the government to investigate.
 To achieve the objectives of social and
economical policies.
 To help in the certain growth of india
corporate sector.
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DISADVANTAGES
➢ Lack of secrecy :
It is difficult to maintain secrecy in the
company from of an organisation as the
company is under obligations such as to
publish its annual accounts , to file MOA,
articles of association and other documents.
➢ Slow decision making
process :
No one in the company is vested with the
final authority to take decision.
➢ Possibility of frauds :
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➢ Not a citizen :
A company is a legal person in the eyes
of law but it not a citizen like a natural person
and company does not enjoy a fundamental
rights let a company has a nationality, and
residential . The nationality is decided by
place of corporation.
➢ Cumbersome winding up
procedure
As compared to a partnership firm, winding
up of a company is very complicated , time
consuming and costly process.
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➢ Cumbersome formation
procedure
To form a company, prescribed legal
formalities are required to be complied with
which are required to be followed by other
forms of business. these include filling of
MOA, AOA, DIN (Director identity number)
etc.
➢ Social disadvantages
The rise of big companies and
multinationals has certain social
disadvantages such as monopolistic
tendencies, wasteful expenditure,
wastage of resources, pollution.
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Summited by :-
Charanjeet Kaur
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Roll no. 4311