Information about company

COMPANY:

Company is a voluntary association of persons registered under the companies Act 1956.  A company has aright to sue and can be sued, can own property in its own name.  The company has perpetual succession, not affected by the life of members.

LIABILITY OF A SHARE HOLDERS OR MEMBERS:

A. COMPANY LIMITED BY SHARES:

              In the case the liability of the members does not exceed the unpaid amount if any on the shares held by them.

B. COMPANIES LIMITED BY GUARANTEE:

              In the case the liability of the members is limited to the amount which shareholders undertake to contribute in the event of winding up of the company.

C. UNLIMITED SHARES:

             In this case the liability of the members is not restricted at all.  They have to contribute the necessary amount in order to pay off the creditors of the company fully.

               

  

THE COMPANIES ACT DEFINES A PRIVATE COMPANY AS A COMPANY WHICH BY ITS ARTICLES:

1.            Restricts the right to transfer its shares.

2.            Limits the number of its member to fifty.

3.            Prohibition any invitation to the public subscribe for any of its shares and debentures.

A company which is not private, that is to say, which does not observe any of the above three restrictions, is known as PUBLIC COMPNAY.

NOTE:   Where 25% or more of the paid up share capital of a private company is held by one or more bodies corporate.  Then the private company shall automatically become a public company.

For this purpose shares held by banks under a trust under certain conditions are not to be reckoned.

The above also does not apply if any:

1.            Its entire capital is held by another single private company.

2.            Its entire paid up capital is held by one or more bodies corporate incorporated outside India.

3.            All the shareholding companies are themselves private companies having no bodies corporate as their members and having not more than so members in all together with the members of the company under question.

If paid up capital held by bodies corporate falls below 25% the company will again become private provided consent of the center Government has been obtained and other provisions of the Act observed.

               

 DIFFERENT CLASSES OF DEBENTURES:

1. POINT OF REDEMPTION:             

               A. REDEEMABLE DEBENTURES:   Repaid end of a specified period

               B. IRREDEMABLE DEBENTURES:  Not repayable due the life of the company.

2. POINT OF SECURITY:

                 A. MORTAGE DEBENTURES: The security may particular asset.

                 B. SIMPLE OR NAKED DEBENTURES: There is no security

3. POINT OF RECORDS:

                 A. REGISTERED DEBENTURES: Entered register kept by the company.

                 B. BEARER DEBENTURES: No records for debenture holders.

4. POINT OF PRIORITY:

                 A. FIRST DEBENTURES: Repaid before other debentures. 

                 B. SECOND DEBENTURES: Repaid after first debentures.

QUORUM: 

PERSONAL PRESENT

                                5 persons in case of a public limited company.

                                2 persons in case of a private company.

                                But the articles can fix the different number.

BOOKS OF ACCOUNTS: (Sec 209)

(a)          All sums of money received or expanded by the company and the matters which the receipts and expenditures take place

(b)          All sales and purchases of goods by the Company.

(c)           All assets and liabilities of the company

(d)          Cost records

Books must be preserving for minimum period of 8 years.

As per INCOME TAX ACT 1961 for minimum period is 16 years.

Issue of shares at discount the discount is allowed max 10%

UNDERWRITING:

Underwriting in this context of a company means undertaking a responsibility or giving a guarantee that the shares or debentures offered to the public will be subscribed for.

               

RECONSTRUCTION:

1.  Internal Reconstruction:- Reduction of capital

2.  External Reconstruction:-Liquidating existing company and Incorporate immediately new co.

  

DIFFERENCE BETWEEN PUBLIC AND PRIVATE COMPANY

MEANING OF LIQUIDATION:

The company is a creation of law and its death also occurs through process of law.  When a company ceases to exist it is said to be liquidated.  It is not necessary that only an insolvent company should be liquidated.  Winding up is roughly 2 types.

1. Court Orders.

2. Members of the company take steps to wind up.

MINORITY INTEREST:

Usually some shares are held by outsiders in the subsidiary company.  Their claim in the subsidiary company has to be evaluated and shown in the consolidated balance sheet.  The claim of the minority shareholders will consist of the face value of the shares held by them plus a proportionate share in any increase in the value of the assets of the company minus their proportion of the company losses or decrease in the value of assets of the company.

WINDING UP BY COURT:

A winging up by the court or compulsory winding up, as it is often called, is initiated by an application by way of petition presented to the appropriate court for a winding up order.  The winding up of a company with a capital of one lakh or more must take place only in High Court.  But in other cases, the high court may transfer the application to a district court subordinate to it.

GROUNDS FOR COMPULSARY WINDING UP:      (SEC 433 PROVIDES)

1. If the company has, by special resolution, resolved to be wound up by court.

2. If default is made in delivering the statutory report to the registrar or in holding the statutory meeting.

3. If the company does not commence its business within a year from its incorporation, or suspends its business for a whole year.

4. If the number of members falls below seven (or in case of a private company below 2)

5. If the company is unable to pay its debts.

6. If the court is of opinion that it is just and equitable that the company should be wound up.

WHO MAY PETITION:

1. The company

2. A creditor

3. A contributory

4. All or any of the above parties.

5. The registrar

6. Any person authorized by central Government as Sec 243.

 SENSEX: Sensitivity index of share price

FMCG:  Fast moving consumer goods.

               

INTANGIBLE ASSETS                                       FICTICIOUS ASSETS

                                               

           PATENTS                                                   Preliminary Expenses

           Good will                                                     Discount on Issue of debentures

           Trademarks                                                  Discount on Issue of Shares

HORIZENTAL MERGER:

Two or More companies same area of business.

VERTICAL MERGER:

Two or More companies involved in different stages of production or distribution of the same product or services.

CONGLOMERATE MERGER:

Two or more companies whose businesses are not related with each other vertically or horizontally.

MERGER: (ABSORPTION)

The term merger refers to a situation where one company acquires the net assets of another company and the latter dissolved.

AMALGAMATION: (CONSOLIDATION)

It refers to a situation where two or more existing companies are combined into a new company formed for the purpose.

**** In case of a Merger one existing company takes over the business of another existing company or companies.

**** In case of amalgamation a new company takes over the business of 2 or more companies.

ACQUISITION:

It refers to acquiring of effective working control by one company over another.