Rishabh Gaur Co.
Act Exam Capsule – CA Foundation Since 2009
Company Act – Sec.1 – 10 Summary
Applicability – Sec. 1 Features
Co. Reg. under Co. Act | Separate Legal Entity – co. can own property, have bank
Banking Co.| Insurance Co. | account, raise loans, incur liabilities and enter into contracts |
Generation and Supply of Salomon v/s Salomon and Co. Ltd. | Macaura Vs. Northern
Electricity and Co. | Co. Assurance Co. Limited
Governed by Special Act | Any Perpetual Succession – Its existence is not affected by the
Body Corporate notified by CG death or insolvency of its members
Corporate Veil Limited liability – Share | Guarantee | Unlimited
Co. is identified separately from Artificial Legal Peron – It can sue and be sued in its own name
the members of the co.| Common Seal – official signature of a company | if no
members of a company are Common seal – signed by 2 directors or by a director and CS
shielded from liability
connected to the company’s Types of Company
actions
Lifting of Corporate Veil On the Basis of Liability On the Basis of Control
when questions of control are Co. Limited by Shares – Holding Co.
involved rather than merely a shareholder may be Subsidiary Co. – controls the
question of ownership | Where called upon to contribute composition of the BoDs; or
company law disregards the only to the extent of the controls more than one-half
principle of corporate amount, which remains of the total voting power
personality unpaid on his either at its own or together
To determine the character of shareholdings with one or more of its
co. - Daimler Co. Ltd. vs. Co. Limited by subsidiary companies
Continental Tyre & Rubber Co. Guarantee – liability of Associate Co. – a company in
To Protect Tax – Dinshaw the member is limited which that other company
Maneckjee Petit upto a stipulated sum has a significant influence
To avoid legal obligation – The mentioned in the (20% or more voting power)
Workmen Employed in
memorandum in wound and includes Joint venture Co.
Associated Rubber Industries up
Limited, Bhavnagar vs. The Unlimited Co. – not
Associated Rubber Industries having any limit on the
Ltd., Bhavnagar and another liability of its members
Formation of subsidiaries to act On the basis of Members
as agents – Merchandise OPC
Transport Limited vs. British MoA should indicate name of Nominee
Transport Commission Nominee must give his prior written consent
Company formed Member may change nominee any time – deemed to be
for
fraud/improper conduct or to no changes in MoA
defeat law – Gilford Motor Co. Only a natural person who is an Indian citizen whether
vs. Horne resident in India or otherwise and has stayed in India for
a period of not less than 120 days during the immediately
Sec. 8 Co. previous FY is eligible to incorporate OPC and be nominee
Formed for the promotion No minor shall become member or nominee of the OPC
of commerce, art, science, Not converted in to Sec. 8 and cannot carry Non banking
religion, charity, protection financial activities
of environment,sports, etc. Penalty - fine which may extend to INR 10,000 and with a
Uses its profits for the further fine which may extend to INR 1,000 for every day
promotion of the objective after the first during which such contravention continues.
for which formed. Private Co.
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Rishabh Gaur Co. Act Exam Capsule – CA Foundation Since 2009
Can not declare dividend to No minimum paid-up capital requirement.
members. Minimum – 2 and Maximum members – 200, excluding
special licence from Central present employee-cum-members and former employee-
Government. cum-members.
Need not use the word Right to transfer shares restricted.
Ltd./ Pvt. Ltd. in its name Prohibition on invitation to subscribe to securities of the
Licence revoked if company.
conditions contravened. Small Co.
On revocation, Central Only A private company can become small co.
Government may direct it Paid up capital – not more than Rs. 4 crores Or
to Turnover – not more than Rs. 40 crores.
Converts its status and Should not be – Section 8 company | Holding or a
change its name Subsidiary company | Public co.
Wind – up Public Co.
Amalgamate with Is not a private company (Articles do not have the
another company restricting clauses)
having similar object. Shares freely transferable.
Can call its general meeting No minimum paid up capital requirement.
by giving a clear 14 days’ Minimum – 7 and Maximum members – No limit.
notice instead of 21 days. Subsidiary of a public company is deemed to be a public
Requirement of minimum company.
number of directors, On the basis on Access to Govt. Co.
independent directors etc. capital any company in which not less
does not apply. Listed Co. - which has than 51% of the paid-up share
Need not constitute any of its securities listed capital is held by- the CG, or by
Nomination and on any recognised stock any SGs or partly by the CG and
Remuneration Committee exchange. partly by one or more SG, and
and Shareholders Unlisted Co. includes a company which is a
Relationship Committee. Dormant Co. subsidiary company of such a
A partnership firm can be a Co. formed for Future project government company.
member of Section 8 and no significant a/c Foreign Co.
company. transaction or Inactive co. any company incorporated
Penalty – Co. 10 lac – 1 (not filed FS or AR from 2 outside India and has a place of
crore & Director and Officer years or not doing significant business in India and conducts
25000 – 25 lac a/c transaction from 2 FY any business activity in India
No Significant A/c
Transactions PFI
payment of fees to Registrar LIC | IDFCL | UTI | Institution
or requirements of this Act Specified by CG in sec 465 |
or any other law | allotment Notified by CG with RBI consult
of shares
|payments for maintenance
of its office and records.
Formation of Co. - Sec. 3 Effect of MoA and AoA – Classification of Capital
Min. members required Sec. 10 Authorised Capital – upon
Public Co. – 7 where the memorandum which it pays stamp duty –
Private Co. – 2 and articles when registered, Registered Capital
OPC – 1 shall bind the company and Issued Capital – offered by
the members as if signed by the company for subscription
them
Promoter
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Rishabh Gaur Co. Act Exam Capsule – CA Foundation Since 2009
Whose name is mentioned in Prospectus or AR or Subscribed Capital – nominal
who has control as a shareholder, or director or amount of shares taken up by
in accordance with whose advice, directions or the public
instructions the BoD accustomed to act (Exception – Called up Capital – total
Professional Capacity) amount called up on the
shares issued
Shares Paid up Capital – total
an interest measured by a sum of money and made up of amount paid - called up
various rights contained in the contract capital less calls in arrears
Kinds of share capital In every notice, advertisement or
Equity share capital (whichis not preference share capital) other official communication or
– any business letter, bill head or
with voting rights; or letter - company states the
with differential rights as to dividend or voting authorised capital, the subscribed
Preference share capital - would carry a preferential and paid-up capital must also be
right with respect to— stated in equally conspicuous
payment of dividend, either as a fixed amount or fixed characters.
rate, and Penalty – Co. 10000 | Every
repayment, in the case of a winding up officer who is in default - 5,000
Incorporation of Co. – Sec. 7 MoA – Sec. 4
Following documents file with Registrar- charter; it defines its constitution
MoA and AoA signed by all subscriber and the scope of the powers of
declaration by engaged CA/Advocate/CS/CMA and Director the company
that all the requirements of this Act have been complied Contents of MoA
with. Name Clause
Declaration by each subscribers and first directors, if any, in Registered Office Clause
the articles stating that- Object Clause
not convicted for promotion, formation or Liability Clause
management of any company, or Capital Cause
he has not been found guilty of any fraud or of any Subscriber Clause
breach of duty during the last five years, Printed | divided into paragraphs
and that all the documents - correct and complete | numbered consecutively, and
the address for correspondence till its registered office is signed by at least 7 /2/1
established; persons with 1 witness
the name, address etc. of each subscriber and director AoA – Sec. 5
(with DIN) rules and regulations -
the particulars of the interests first directors in other Body framed to manage its internal
Corporate affairs
Registrar shall register all the documents and information in the regulates domestic
register and issue a certificate ofincorporation and issued CIN management of a company
The company shall maintain and preserve all documents copies creates certain rights and
at its registered office obligations between the
For any false or incorrect particulars - liable for action for fraud members and the company
under section 447.
Order of the Tribunal (after giving opportunity of being heard)
members shall be unlimited liable; or
direct removal of the name of the company from the RoC;
or
pass an order for the winding up of the company; or
pass such other orders as it may deem fit:
Difference Between MoA and AoA
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Rishabh Gaur Co. Act Exam Capsule – CA Foundation Since 2009
Basis MoA AoA
Objective defines the objectives of the company determine how the objectives of the
company are to be achieved
Relationship company with the outside world between the company and its members
Alteration In most cases permission of the Regional altered simply by passing a special
Director, or the Tribunal is required resolution
Ultra vires cannot be ratified even by the can be ratified by a special resolution of
unanimous consent the shareholders (if intra vires to MoA)
Doctrine of Ultra vires Doctrine of Constructive Doctrine of Indoor Management
beyond (their) powers Notice exception to the doctrine of
Ashbury Railway Carriage and The MoA and AoA of a constructive notice
Iron Company Limited v. Riche company when registered The Royal British Bank vs.
ultravires the co. and with RoC, become public Turquand
hence null and void documents, outsiders are deemed to have
ultravires, the co. Sec. 399 - available for notice of the internal affairs of the
cannot be ratified inspection to any person, on company
shareholders the payment of a nominal Exception –
ultravires to directors, fees. Actual or constructive
but intravires the co. It is the duty of every person, knowledge of irregularity -
can be ratified by the who are dealing with Co. – Howard vs. Patent Ivory
members to inspect its documents - Manufacturing Co.
ultravires the Articles - read the documents and also Suspicion of Irregularity -
can be ratified by understood them in their Anand Bihari Lal vs. Dinshaw &
altering the Articles by true perspective Co.
a Special Resolution at Forgery - Ruben v Great Fingall
a generalmeeting. Consolidated
Notes
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This Summary, in no way, is a substitute to the Study Material issued by ICAI. It is only a humble effort
to help the students to revise their Co. Act syllabus.
Every effort has been made to avoid errors or omissions in this publication. Any mistake, error or
discrepancy noted may be brought to our notice which shall be taken care of in next edition.
Wish you all the best in your study endeavors. Happy Learning!
Rishabh Gaur
Educator Since 2009
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Rishabh Gaur Co. Act Exam Capsule – CA Foundation Since 2009
8527931436
For any query, YouTube revision videos, test series, notes and summary whatsapp at 8527931436
