Legal & Tax aspects

of
business

Presented by - Gulnaz Khan

 Basic Instructions

 Internal evaluation - 40 marks

1) 20 marks Class Participation , Attendance, regular

Activity
2) 10 marks Class test
3) 10 marks presentation

 Semester End Written Exam - 60 marks

 Chapters of Legal & Tax….
1) Incorporation of Companies 2013
2) Company Management
3) Company Management continue….
4) Indian contract act 1872
5) Practical on Direct tax ( S & HP )
6) Practical on Direct tax ( CG )
7) Practical on Direct tax ( B & P )
8) Practical on Direct tax ( OS )
9) Practical on Indirect tax ( ST )
10) Practical on Indirect tax ( VAT )
11) Presentation
12) Class Test
 References
1) S.M SHAH COMPANY LAW

2) AVATAR SINGH COMPANY LAW

3) GUIDE TO ACT BY RAMAIAH

4) COMPANY LAW BY BULCHANDANI

5) Many more books available in library……

 What is law ???
• Law:
 law is a system of rules and guidelines which are enforced through social
institutions to govern behavior.
 Laws are made by governments, specifically by their legislatures.
 The formation of laws themselves may be influenced by a constitution
and the rights encoded therein.

• Corporate law:
I. "company" or "corporations“
II. part of a broader companies law ( law of business associations)

• Company law: ( Business law)

o 1882 first act in India, 1913 replaced, ICA 1956

o Accounts of companies, inter corporate loans, regulation act SEBI
 Incorporation of Companies
2013
1) Company
2) Features of a company
3) Procedure for Formation of a company
4) Procedure for changing the name of a company
5) Types of companies
6) Memorandum of association
7) Articles of association
 1) Company

• A company is defined as “a voluntary incorporated

association which is artificial person, created by law
with limited liability having a common seal and
perpetual succession.”
 2) Features of a Company
1) Registration
2) Distinct Person (Separate legal entity)
3) Perpetual Succession
4) Artificial Person but not a citizen
5) Transferrable shares
6) Limited liability
7) Common seal
8) Separate property
 3) Procedure for Formation of a Company
1) Approval of Name
 Asset and identity of company
 Criteria for approval of name:
 Name should not be identical or should not too nearly resemble the name
of another registered company
 Should not to be Considered undesirable by central government (section
20(1))
 Prevention and improper use act 1950, not violate .e.g. UNO, MAHATMA
GANDHI,PRIME MINISTER OF INDIA, NATIONAL FLAG etc.

2) Submission of memorandum of association

3) Submission of Articles of association
4) Power of attorney for correcting MOA & AOA
5) Statutory declaration of compliances
6) Filing fees
7) Certificate of incorporation
8) Certificate of commencement of business
 Company organization
share holder
(real owners)
Decide major policies
Meet once in year AGM
More meeting if required
 Minimum 2 & maximum 50 members (private company)
 Minimum 7 & maximum unlimited (public company)

Board of director
Overall control over the company affairs
Meet minimum 4 times a year, more if required
 Minimum 2 directors for private & 3 for public company
 Maximum 12 directors. More with permission of central government

Managerial personnel
Managing director/ manager
 Managing day to day matters subject
 Difference between Company and Partnership Concern
Partnership
Registration: Registration of firm is not
compulsory.
Membership : Minimum two persons
constitute a partnership .maximum
membership in case of partnership doing
banking business is ten persons and for other
business is twenty persons.
Legal Status: A firm has no separate legal
status.
Management: Management are in the hands
of the Partners.
Existence: Partnership has no perpetual
existence.
Liability: Partners of the firm are liable to
Unlimited extent in Partnership there is an
Unlimited Liability.
Death: Death of the Partner may mean
dissolution of the Partnership.
Company
Registration : registration of a company is
compulsory under Company Act 1956.
Membership : Minimum two and maximum
fifty constitute a Private Limited company
and For public Limited Company minimum
seven and maximum unlimited constitute its
requirement.
Legal Status : A company has a separate legal
existence of its own.
Management: Management are in the Board
of Directors which is elected by Shareholders.
Existence: Company has a perpetual
existence.
Liability: The Liability of the Shareholders is
generally limited.
Death: Death of the Shareholder does not
effect the existence of the company.
 4) Procedure for changing the name of a
company
1) Board meeting for deciding the agenda for change in name

2) Seeking name availability for proposed new name from ROC (with fees)

3) Approval of members in general meeting

4) Registration of Special Resolution with ROC through form-23

(Section-192)

5) Filing of form-1B with ROC u/s 21

 Types of Company

Royal charter
Statutory Registered
or charted
company company
company

Company LTD Company LTD Unlimited

by shares by guarantee company

Private Public
company company
 5) Types of companies

1) Royal Charter or Chartered Companies

 Example east India company

2) Statutory Companies
 Provide public services

 Example gas, water, electricity etc.

3) Registered Companies
 Registered Companies
1) Companies Limited by Shares
 Limited liability, share capital, share
 Two types:
i. Private limited company
ii. Public limited company

2) Companies Limited by Guarantee

 Don’t have share capital
 Member pay sum fixed amount (winding up)
 Called guarantee

3) Unlimited Companies
 Unlimited liability
 Example ordinary partnership firm
 Companies Limited by Shares
1) Private limited company :-
 Minimum 2 maximum 50 members
 Minimum 2 directors
 Restrictions on transferability of shares
 Not issue prospectus
 Not invite public for share capital
 Many procedural activity

2) Public limited company :-

 Minimum 7 maximum unlimited members

 Minimum 3 directors
 Issue prospectus
 Invite public for share capital
 Listed company follow SEBI
 6) Memorandum of association
 Constitution of company
 Benefit of creditors shareholder

A. Clauses of Memorandum of association

1. Name clause
2. Registered office clause
3. Object clause (trading and non-trading company)
4. Liability clause
5. Capital clause
6. Subscription clause (details about members like name and address)

B. Alteration of Memorandum of association :

1. Change in Name clause
2. Change in Registered office clause
– Change within same city (section 146, form no 18)
– Change within same state (section 146, form no 23)
– Change to another state (section 17(1)with reason with permission of CLB
that is company law board)
3. Object clause (section 17(1))
4. Liability clause (section 32(3)), (does not arises)
5. Capital clause ( if AOA changes, with special resolution in general meeting
 7) Articles of association
A. Meaning

 Rules regarding internal management

 Authorities and responsibilities of members, directors, manager etc.

B. Alteration of Articles of association

 AOA can not to be against of MOA

 Must be bona fide for the benefit of company

 Company cant not justify breach of contract by AOA.

 AOA cant change private company to public company.

 Cant include anything which is illegal or oppose to public policy.

Thank you …….