COMPANY ACCOUNT:

A company is a legal entity formed by a group of individuals or entities to engage in

business activities. It is created under the law and has rights and liabilities distinct
from those of its members. A company can own property, enter into contracts, sue or
be sued, and carry out various business functions.

Characteristics/Features of a Company:
1. Legal Entity: A company has a separate legal identity distinct from its owners or
shareholders.
2. Limited Liability: Shareholders' liability is limited to the amount unpaid on their
shares.
3. Perpetual Existence: A company is an artificial person under law. It continues to
exist even if its members change, ensuring continuity.
4. Transferability of Shares: Shares of a company are freely transferable, allowing for
easy change of ownership.
5. Separate Management: The management of a company is separate from its
ownership, with directors managing its affairs.
6. Common Seal: A company typically has a common seal used to authenticate
documents.
7. Separate Property: A company's assets and liabilities are distinct from those of its
members.
8. Capacity to Sue and Be Sued: A company can take legal action and be subject to
legal proceedings.
9. Borrowing Capacity: A company can borrow funds in its own name, enabling it to
raise capital.

Types of Companies (on the basis of incorporation):

1. Chartered Companies:
 Formed by a royal charter granted by the King/ Head of State, historically used
for trade and colonization.
2. Statutory Companies:
 Created by a special act of the legislature, often for public utility services like
railways or electricity.
 These companies may or may not use the word ‘limited’.
 Example: RBI, Indian Railways, IFCI etc.
3. Registered Companies:
 Established under the Companies Act’1956 through the process of registration.
 The powers exercised by such companies are defined by the Companies Act and
Memorandum of Association.
 A registered company can be a Private Ltd. Company or a Public Ltd. Company

Types of Companies (on the basis of shareholdings):

1. Public Limited Company (PLC):

 These companies are owned by the public through the purchase of shares
traded on a stock exchange.
 It is formed with a minimum of seven members.
 It invites general public to subscribe to its shares.
  There is no restriction on the maximum number of members.
 It permits the transfer of shares.
 It is a company in which public at large is interested.

2. Private Limited Company (Ltd.):

 Ownership is restricted to a small group of shareholders, and shares cannot be
freely traded.
 It has a minimum of two members and a maximum of 200 members.
 It prohibits any invitation to the public to subscribe to its shares and
debentures.
 It does not invite general public to invest deposits in the company.
3. One Person Company (OPC): A type of private company that can be formed with just
one shareholder, providing limited liability to the sole owner.
4. Unlimited Company: Shareholders have unlimited liability for the company's debts,
and there is no limit on the number of shareholders.
5. Guarantee Company: Members' liability is limited to a predetermined amount they
agree to contribute in the event of the company's winding up, often used by non-profit
organizations.

Holding Companies and Subsidiary Companies:

Holding Company:
 A holding company is a type of company that controls other companies through
ownership of their shares.
 It typically holds a majority stake in the subsidiary companies, giving it
significant influence or control over their operations and management.
 Example: Alphabet Inc. is a holding company that owns subsidiaries such as
Google, YouTube, and Waymo.

Subsidiary Company:
 A subsidiary company is a company that is controlled by another company,
known as the parent or holding company.
 It operates independently but is subject to the control or influence of the parent
company.
 Example: YouTube is a subsidiary of Alphabet Inc., which provides it with
resources and support while allowing it to operate independently in the online
video streaming industry.

WINDING UP: Winding up, also known as liquidation, is the process through
which a company is formally dissolved, its assets are sold off, and its operations cease
to exist. This can happen for various reasons, such as insolvency, bankruptcy, or by
choice of the company's shareholders or directors. Here's a concise breakdown:

 Initiation: It starts with a decision by shareholders, creditors, or a court order.

 Liquidator: A professional is appointed to oversee the process.
 Asset Realization: Assets are sold off to repay debts.
 Debt Settlement: Outstanding debts are paid off in a specified order.
 Surplus Distribution: Any remaining funds are distributed to shareholders.
 Finalization: Once all tasks are complete, the company is dissolved.

GARNISHEE ORDER:

Garnishee Order Overview:

Definition: A legal order obtained by a creditor to recover a debt from a third party
who owes money to the debtor, known as the "garnishee."
Purpose: Redirects funds owed to the debtor directly to the creditor, satisfying the
debt owed.

Key Provisions:
1. Notice to Garnishee (Rule 46A):
 Court may issue notice to garnishee, calling to pay debt to judgment-debtor or
show cause.
 Application made on affidavit verifying facts.
 Court may direct payment to decree-holder if debt is paid into court.

2. Notice Against Garnishee (Rule 46B):

 If garnishee doesn't pay into court or show cause, court may order compliance.
 Order of compliance treated as decree against garnishee.

3. Stopping a Garnishee Order:

 Pay Full Debt: Debtor pays full debt within time specified by court to prevent
garnishee order.
 Alternative Repayment: Debtor arranges alternative repayment with creditor,
subject to creditor's discretion.
 Pay by Instalments: Debtor approaches court to pay debt by instalments, if
accepted, garnishee order terminated.
 Bankruptcy: Declaration of bankruptcy ceases garnishee orders related to
unsecured debt.