Unit III - Company Law (Detailed Notes)
1. Company - Definition, Characteristics, Kinds
- Definition: A company is an artificial person created by law, having a separate legal entity,
perpetual succession, and limited liability.
- Characteristics:
- Separate Legal Entity
- Limited Liability
- Perpetual Succession
- Common Seal
- Transferability of Shares
- Kinds: Private Company, Public Company, Government Company, One Person Company, Section
8 Company
2. Privileges of Private Company
- Exemption from statutory meetings, filing prospectus, minimum capital, independent directors, and
some SEBI rules.
3. Formation of a Company
- Promotion, Incorporation, Subscription, Commencement of Business.
4. Memorandum of Association (MoA)
- Meaning: Fundamental charter.
- Purpose: Defines company scope.
- Contents: Name, Office, Objects, Liability, Capital, Association Clause.
- Alteration: Special resolution + RoC approval.
5. Doctrine of Ultra Vires
- Acts beyond MoA are void. Protects investors and creditors.
6. Articles of Association (AoA)
- Meaning: Internal management rules.
- Contents: Share capital, meetings, directors, voting.
- Alteration: Special resolution.
7. Doctrine of Indoor Management
- Protects outsiders assuming internal compliance. Exception to constructive notice.
8. Prospectus
- Document inviting public to invest.
- Contents: Financials, risks, director details.
- Misstatements lead to liability.
9. Shares and Debentures
- Shares: Equity (ownership), Preference (fixed dividend).
- Debentures: Debt instruments.
- Difference: Shares = Ownership, Debentures = Debt.
10. Director and Secretary
- Director: Qualifications, disqualifications, duties (fiduciary, good faith).
- Secretary: Compliance, record keeping.
11. Meeting
- Requisites: Notice, quorum, agenda, chairperson.
- Types: AGM, EGM, Board Meetings.
12. Winding Up
- Meaning: Closing of a company.
- Modes: Voluntary, Compulsory (court), Tribunal ordered.
