The Companies Act

Topics covered
Characteristics of a company
Formation of a company
Types of companies
Management of a company
Meetings
Accounts and Audit



Company

Company means a company formed and
registered under the Companies Act, 2013 or
under any previous company law

Governing laws
The Companies Act, 1956
The Companies Act, 2013
Rules prescribed thereunder



Important regulatory authorities under
the Companies Act

Ministry of Corporate Affairs, Central Government
Comprising Secretary, Joint Secretary, Deputy
Secretary, Director of Inspection & Investigation,
etc.
Registrar of Companies (ROC);
Regional Director;
Company Law Board (CLB) at Delhi with benches
in the north, south, east and west; and
Official Liquidator.
NCLT, NFRA and SFIO - CA 2013
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Types of companies
Public company
Private company
One person company (CA 2013)

Limited by shares or guarantee
Unlimited company

Association not for profit
Foreign company
Government company

Holding and subsidiary company
Public Company [ Section 2 (71)]
has minimum paid-up share capital of
Rs.500,000 or such other amount as may be
prescribed.
Minimum number of members - 7
a private company which is a subsidiary of a
public company.

Private Company
Minimum paid-up share capital of Rs.100,000/- or such
higher amount as may be prescribed.
restricts right to transfer shares
Minimum number of members - 2
Maximum number of members - 200
Prohibits invitation to the public for shares
Prohibits any invitation or acceptance of deposits from
persons other than its members, directors or their
relatives.
One person company
Single person as member


Limited by shares or guarantee
Limited by shares


Liability of members is
restricted to the amount
unpaid on shares
Limited by guarantee


Undertaking to contribute
to assets of the company in
the event of winding up
etc.,
Eg: clubs, charities etc.


Unlimited company

A company not having any limit on the liability of its
members. However liability is towards company and not
towards companys creditors directly or indirectly.

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Associations not for profit
Need not add the word Private Limited or
Limited.
Formed for promotion of commerce, art, science,
sports, education, research, social welfare,
religion, charity, protection of environment or any
such other object;
Intends to apply its profits or other income in the
promotion of its objects
Does not intend to pay any dividend


Holding and subsidiary company
A company shall be a subsidiary, if the holding
company:
controls the composition of its Board of Directors,
controls directly or together with one or more other
subsidiary companies more than half of the total share
capital
Is a subsidiary of any company which is that others
subsidiary.

Foreign Company
Company incorporated outside India having a place of
business in India
Government company
Company in which not less than 51% of the paid up
share capital is held by:
Central government (CG)
State government(s) (SG)
Partly by CG and partly by one or more SG
also includes subsidiary of a government company

Essentials for a company
Certificate of incorporation
Corporate Identification Number (CIN)
Certificate of commencement of business
Memorandum of Association
Articles of Association
Registered office
Minimum number of directors



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Characteristics of a company
Separate legal entity
Limited liability
Perpetual succession
Separate property
Transferability of shares
Common seal
Capacity to sue and be sued
Contractual rights
Limitation of action
Separate Management
Voluntary association for profit
Created by law and hence can only be terminated by
law.


Formation of a company
Check name availability on MCA 21 portal adhere to the
name availability guidelines
Apply to Registrar of Companies (ROC) for name in
e-form 1A
In case the name includes the name of group company- NOC
is required to be obtained from the Board of directors of that
company
Prepare draft memorandum and articles of association
On receiving name availability letter from ROC, file
Eform 1- application for incorporation
Eform 18- notice of registered office
Eform 32- appointment of directors


Obtain consents from directors and requisite declaration
that they are not disqualified from being appointed as
directors under Companies Act
All formalities to be completed within 60 days of name
availability, if not apply for revalidation of the name.

ROC will approve and Corporate Identification Number
(CIN) will be generated and Certificate of Incorporation
will be issued

CIN- U17118MH1983PTC03xxxx
L12345DL1999PLCxxxxxx

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Certificate of Incorporation
Memorandum of Association
MOA is a charter constituting the company, consisting of
six clauses namely:

Name Clause
Situation Clause
Objects Clause
Liability Clause
Capital Clause
Association Clause


Articles of Association

AOA is a document laying down the internal regulations of a
company.
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Sources of funds
Capital
Borrowings

Share means share in the share capital of a
company and includes stock
Securities include
Shares, scrips, stocks, bonds, debentures, debenture
stock or other marketable securities of a like nature in or
of any incorporated company or other body corporate;
Derivatives
Government securities;
Such other instruments as may be declared by the Central
Government to be securities;
Rights or interest in securities.


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Kinds of share capital
Equity
Preference
With voting
rights
With differential
rights
Cumulative

Non-
cumulative
Participating

Non-
participating
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MODES OF ISSUE OF SHARES
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Nature of borrowings

The borrowings may be by way of-
Debentures/ Bonds
Deposits
Loans (rupee or foreign currency), (short term or
long term)
ECB
Working capital loans
Overdraft
Commercial paper
Borrowings may be either secured or unsecured, long
term or short term, convertible and non-convertible.



Limits for Borrowings

The borrowings should not exceed the paid-
up capital of the company and its free
reserves, unless shareholders approval
obtain by special resolution in a general
meeting.

Authority to borrow
Board and shareholders resolution
Inter-Corporate Loans and
Investments
Limit for Inter-Corporate loans and
investments
Authorisation
Register
Delegation of powers by board
Exemptions
Disclosure under listing agreements and
accounting standard
Management and Administration
Board of Directors
Committee of directors Audit committee,
SIGC, Remuneration Committee,
Nomination Committee
Key Managerial Personnel
MD, Manager, WTD
CEO
CFO
Company Secretary

Directors
Maximum number of directors
Types of directors
Executive
Non- executive
Independent
Appointment of directors
First directors
Additional directors
Nominee directors
Independent directors
Compliance with Clause 49 of Listing Agreement
Retirement by rotation / Removal
Qualification and disqualifications for being a director
Duties and responsibilities of directors
Vacation of office of director

Disclosures, consents and declarations by
directors
Managerial personnel MD / WTD/
Manager
Remuneration of managerial personnel
Change in KMP
Related party transactions


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Directors
Minimum Number of directors
Private company 2
Public company 3
Maximum
For private company- can be provided in Articles of
Association
For public company- 12 (15) directors. Company can
apply to CG to increase the number
Number of directorships 15 (20)



Meetings
Board Meetings
At least 4 meetings in a year. Gap of not more than 120
days
Quorum 1/3 of total strength or 2 directors
Video conferencing
Notice- not less than 7 days. With short notice, at least one
independent director present
Agenda
Minutes
Resolution by circulation
Chairman

Audit committee
Minimum 3 directors, majority to be
independent directors

Nomination and Remuneration Committee
Stakeholders relationship committee




Meetings of stakeholders
Annual General Meetings
Extraordinary General meetings
Creditors meetings
Court convened meetings
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AGM (Annual general meeting)
Once a year and not more than 15 months shall elapse
between two meetings
Within 6 months of end of financial year
EGM (Extraordinary general meeting)

Quorum
Notice
Explanatory statement


Voting Rights
Equity
Preference
DVR

Voting can be by:
Show of hands
Poll
Postal ballot

Resolutions Ordinary or special
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Accounts and Audit

Books of Accounts, financial statements-
signing, approval, inspection
Accounts should be adopted by
shareholders within 6 months of end of
financial year
Financials of subsidiary and consolidated
accounts
Directors report
Corporate Governance Report
Management Discussion and Analysis
Report as per Listing agreement


Auditors- appointment, qualification,
disqualification, removal, retirement, rights
and duties, auditors report

Persons responsible for accounts

Filing with ROC


Some important filings with ROC
Annual Return
Financial statements
Directors Report
Form 32
Form 18
Form 5
Form 2
Forms 8 and 17
Form 23B
Form 23
Form 25C
Change in promoter shareholding (new)
Restructuring
Capital restructuring Reduction of
capital
Merger and amalgamation
Acquisition
Take over
Credit debt restructuring
Financial restructuring
Demerger
Buy back

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