Introduction to company ,types Of company & Formation of company

Company –its meaning COMPANY is a voluntary association of persons formed for the purpose of doing business, having a distinct name and limited liability. It is a juristic person having a separate legal entity distinct from its members who constitute it, capable of rights and duties of its own and endowed with the potential of perpetual succession.

Characteristics of a company Incorporated association Separate legal entity Limited liability Separate property Perpetual succession Transferability of shares Common seal Capacity to sue and be sued

Advantages of incorporation Artificial legal Person Limited liability Perpetual succession Transferability of shares Infinite Membership Permanency of capital & protection to creditors Mobilization of Huge resources Separate Property Ease in Control & management Capacity to sue

disadvantages of incorporation Formalities & Expenses Corporate Disclosures Divorce of control from Ownership Loss of privacy Detailed winding up procedure Control by few Greater social responsibility More tax burden in certain cases Possibility off frauds

opc public private opc public private opc private public companies incorporated Chartered Statutory unincorporated Registered companies Companies limited by guarantee Unlimited limited companies Companies limited by shares opc public private opc public private opc private public

Private and public companies Private companies It’s a very suitable form for carrying on the business of the family & small concerns as the minimum numbers required is only 2. [Sec. 2(68)] of the companies act 2013 deals with the definition of private company that provides that every private company should have a minimum paid up capital of 1 lakh rupees. The definition of the private company is quoted u/s 2(28) of the Companies act, 2013. it means a company which has a minimum paid up capital of one lakh rupees or such higher paid up capital as may be prescribed and by its articles:-

Restricts -- the right to transfer its shares Limits -- the no. of its members to two hundred Prohibits – any invitation to the public to subscribe for any shares or debentures of the company Prohibits – nay invitation or acceptance of deposits from person other than its members , directors or there relatives.

Public companies According to section2(71) of the companies act 2013 A Public Company means a company which :- 1 . Is not a private company 2. has a minimum paid up capital of five lakh rupees or such higher paid up capital as may be prescribed 3.is a private company which is subsidiary of a public company.

Government companies Section 2(45) of the companies act defines a government company to mean any company in which not less than 51% of the paid up capital is held by: The central government the state government or governments Partly by the central government and partly by one or more state government, or by any state government or governments, or partly by the central govt. & partly by one or more state governments.

Foreign companies It means a company incorporated outside India and having a place of business in India. Accordingly a company which is incorporated outside India and employs agents in India but has no office or does not establish a place of business in India will not be a foreign company . According to section 2(42) of companies act 2013, a foreign company is one incorporated outside India which established a place of business within India after the commencement of this act, or which had a place of business within India before the commencement of this act and continues to have the same at the commencement of this act .

One person company GROUP One person company is a new concept in India under the companies act 2013section2(62) of the companies act 2013 defines that one person company means a company which has one person as a member One person company is required to identify in its name in bracket as one person company after its name. It means a group of two or mo0re individuals associations firms or bodies corporate or any combination thereof, which exercises or is in a position to exercise or has the object of exercising control over any body corporate firm or trust. GROUP

Public financial institutions The companies Act provides that each of the following institution shall be deemed to be public financial institution for this purpose of this act namely : The industrial credit and investment corporation of India limited The industrial development bank of India The life insurance corporation of India The unit trust of India The infrastructure development finance company limited, a company formed and registered under this act .

Stages in formation of company Formation of a company Stages in formation of company

promotion Function of a promoter It’s the 1st and important stage. Promotion is the process of organizing and planning the finances of a business enterprise under the corporate form. The persons who undertake the task of promotion are called promoters. Discovery of idea Detailed investigation assembling resources Preparing preliminary documents Entering into preliminary contracts Naming a company Appointment of bankers, brokers, solicitors & underwriters Function of a promoter

Memorandum of association INCORPORATION A company comes into existence when a no. of persons come together with a view to exploit some business opportunity. they may form an incorporated company for a lawful purpose by subscribing their names to the Memorandum of Association and complying to the other requirements in respect of registration like availability of name ,ensuring the minimum paid up capital ,formalities to obtain certificate of incorporation there are various documents which needs to be filled with the registrar. 1 It’s the charter of the company. This includes its objectives, its name, the address of its registered office, the capital which the company is authorized to raise etc. Memorandum of association

Articles of association 2 This contains the rules and regulations relating to the internal management of the company. vetting of memorandum, articles, printing, stationary, and signing the same printing of memorandum and articles Stamping of memorandum and articles Signing of memorandum and articles Dating of memorandum and articles Copy of proposed agreement power of attorney Consent of the directors Particulars of directors along with din Filling of agreement Notice of registered address must also be made Statuary declaration of compliance Articles of association

Certificate of incorporation The legal effect of incorporation is as under :- A company becomes a body corporate distinct from its members A company has a perpetual succession and common seal A company can sue and can be sued in its own name A company has a right to hold on and alienate its own property Company's debts and obligations are the liabilities of the company only and cant be enforced against the individual shareholders.

Capital subscription Commencement of Business When a company has been registered and has received certificate of incorporation it is ready for flotation that means it can go ahead with raising capital necessary to commence business and to carry on its operations satisfactory. Commencement of Business Companies can commence their business after obtaining the certificate of commencement of business and to obtain the same there are various Documents which are needed to be filed with the registrar of companies .like list of members of company , certified copy of MOA & AOA….. etc