LEGAL
ASPECTS OF
BUSINESS -
MODULE 4
Content
01 INRODUCTION
02 ONE PERSON COMPANY
03 INCORPORATION OF COMPANY
04 MOA-MEMORANDUM OF
ASSOCIATION
05 AOA-ARTICLES OF ASSOCIATION
06 APPOINMENT OF DIRECTORS
WINDING UP OF COMPANIES &
07 IT’S TYPES
The Companies Amendment
Act 2015 - TYPES
Private companies Small
Companies
Dormant
Public Companies
Companies
One Person Companies
FEATURES
The Companies (Amendment)
Removal of minimum
Act, 2015 introduced several
key features aimed at
01 paid-up share capital
improving corporate
governance and simplifying
business operations in India.
Here are four important
Common seal made
features:
optional 02
Declaration of
03 commencement of
business
Punishment of
acceptance of deposits 04
A one-person company, often referred to as a sole
proprietorship or single-member LLC (Limited Liability
Company), is a business structure where a single individual
owns and operates the business. This model is popular for
freelancers, consultants, and small business owners.
KEY FEATURES ADVANTAGES DISADVANTAGES
Simplicity Low startup costs Limited resource
Full control Flexibility Workload
Taxation Direct relationship Liability risks
with customers
Liability
INCORPORATION OF COMPANY
Incorporation is the legal process used to form a corporate entity or
company. A corporation is the resulting legal entity that separates the
firm's assets and income from its owners and investors.
Steps to form a Incorporate Company:
1. Choose a Corporate Name
2. Draft Articles of Incorporation
3. File with the State
4. File with the State
5. Obtain Licenses and Permits
6. Get an Employer Identification Number (EIN)
7. Open a Corporate Bank Account
8. Hold Initial Meetings
MEMORANDAM OF ASSOCIATION
The Memorandum of
Association (MoA) is a
legal document that
outlines the fundamental
conditions under which a
company operates,
serving as its charter and
defining its relationship
with shareholders and the
external environment.
COMPONENTS
Name clause
Registered office
clause
Object clause
Liability clause
Capital clause
Associate clause
ARTICLES OF ASSOCIATION
As per Section 2(5) of the Companies Act, 2013 articles means the
Articles of Association (AOA) of a company originally framed or altered
or applied in pursuance of any previous company law or of this Act.
Companies Required to File an Articles of Association
The following entities must file their own articles of association:
COMPANIES LIMITED BY PRIVATE COMPANIES
UNLIMITED COMPANIES
GUARANTEE LIMITED BY SHARES
CONTENTS OF AOA
1) Rights on 6) Rights on appointment
shareholders of directors and
reappointment
2) Minimum subscription
7)Rights on appointment of
3) Rights on application auditors
and allotment of shares
8)Rights on regarding
4) Rights on call of winding up of the company
shares
5) Rights on forefeiture
of shares
Appointment of directors
1. Minimum Number of Directors
- A private company
- A public company
- A One-Person Company (OPC)
2. Women Director Requirement:
- Under Section 149(1) of the Companies Act, 2013,
certain categories of companies are required to appoint
at least one-woman director on their boards.
3. Independent Directors:
- Public listed companies are required to have at least
one-third of the total directors as independent
directors.
Process of Appointment
[Link] the promoter of the company
[Link] the subscriber to the memorandum
[Link] the shareholders in general meeting
[Link] the Board of directors
5. By the Central Govt (Sec 408): 3 years (Safeguard the interest of
public)
6. By Propositional Representation. A.G.M (3 years period)
7. By Third Parties: (financial Corporations, Debenture holders &
Banking Campines)
Not more than 1/3.
Types
Winding up of
companies
Winding up is the legal
process of dissolving a Voluntary Compulsory
company, bringing its
existence to an end. This
process involves the
liquidation of assets,
settlement of debts, and
distribution of remaining
assets to shareholders.
The mode of winding up
can be voluntary,
compulsory, or
creditors'. Foreign
Creditor’s company
DIFFERENT MODES OF WINDING UP
Introduction :-
-> There are two ways in which a
company may be wound up: by
the company voluntarily
(voluntary winding up), or by the
court (compulsory winding up).
-> Closing a company isn’t
always about whether it has
money; both companies with
money and those in debt can be
closed for different reasons.
COMPULSORY VOLUNTARY
WINDING UP WINDING UP
PROCEDURE TYPES
ELIGIBLE PETIIONERS -Member’s voluntary winding
up
GROUNDS FOR WINDING UP -Creditor’s voluntary winding
up
-Inability to pay debts
ASSETS & LIABILITIES
-Insolvency test
-Creditor classification
-Balance sheet Test -Distribution of assets
