company law

In this article, Parth Verma, from Symbiosis Law School, a first year student, talks about the plethora of types of companies that exist and certain legal aspects which are there in a company.

Table of Contents

Introduction

This article has been written in the context of “The Companies Act, 2013”. Hence this article must be read in the light of The Companies Act, 2013. For downloading the said Act, click here.

According to Sec. 2 (20) of The Companies Act, 2013, a “company” means a company incorporated under The Companies Act, 2013 or under any previous company law.

The Indian Companies Act, 2013 has replaced the Indian Companies Act, 1956. The Companies Act, 2013 makes the provisions to govern all listed and unlisted companies in the country. The Companies Act 2013 implemented many new sections and repealed the relevant corresponding sections of the Companies Act 1956. This is a landmark legislation with far-reaching consequences on all companies incorporated in India.

It is needless to say that we have a multitude of companies of various kinds. From corporate companies to one person company, we have so many kinds of companies. Mainly these companies can be classified on the basis of size of the company, number of members, control, liability and manner of access to capital. This article shall be talking in-depth about all such, and various other kinds of companies too.

Classification of companies:

On the basis of size or number of members in a company:

Private Company:

According to section 2(68) of the Companies Act, 2013 (as amended in 2015), “private company”  is essentially defined as a company having a minimum paid-up share capital as may be prescribed, and which by its articles, restricts the right to transfer its shares. A private company must add the word “Private” in its name. It can have a maximum of 200 members.

Public Company

Section 2(71) of the Companies Act, 2013 (as amended in 2015), defines a “public company”. A public company must have a minimum of seven members and there is no restriction on the maximum number of members. A public company having limited liability must add the word “Limited” at the end of name. The shares of a public company are freely transferable.

One Person Company:

The Companies Act, 2013 also provides for a new type of business entity in the form of a company in which only one person makes the entire company. It is like a one man- army. Under section 2(62), One Person Company (OPC) means a company which has only one person as a member.

On the basis of control, we find the following two main types of companies:

Holding Company:

Such type of company directly or indirectly, via another company, either holds more than half of the equity share capital of another company or controls the composition of the Board of Directors of another company.

A company can become the holding company of another company in any of the following ways: 

  • by holding more than 50% of the issued equity capital of the company,
  • by holding more than 50% of the voting rights in the company,
  • by holding the right to appoint the majority of the directors of the company.

Subsidiary Company:

A company, which operates its business under the control of another (holding) company, is known as a subsidiary company. Examples are Tata Capital, a wholly-owned subsidiary of Tata Sons Limited.

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On the Basis of Ownership, companies can be divided into two categories:

Government Company:

“Government company”under Section 2(45) of the Companies Act, 2013 is essentially defined as, that company in which equal to or more than 51% of the paid-up share capital is held by the Central Government, or by any State Government or Governments (more than one state’s government), or partly by the Central Government and partly by one or more State Governments, and includes the company, which is a subsidiary company of such a Government company.

A government company gives its annual reports which have to be tabled in both houses of the Parliament and state legislature, as per the nature of ownership.

Some examples of government company are National Thermal Power Corporation Limited (NTPC), Bharat Heavy Electricals Limited (BHEL), etc.

Non-Government Company:

All other companies, except the Government Companies, are known as Non-Government Companies. They do not possess the features of a government company as stated above.

Associate companies

The provisions of Section 2 (6) of the Companies Act, 2013 and the Rule 2 of Companies (Specification of definitions details) Rules, 2014, essentially explains (defines) “associate company” as;

For companies say X and Y, X in relation to Y, where y has a significant influence over X, but X is not a subsidiary of y and includes joint venture company. Here X is an associate company. Wherein;

  1. The expression, “significant influence” means control of at least twenty percent of total voting power, or control of or participation in business decisions under an agreement.
  2. The expression, “joint venture” means a joint agreement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement.

When a company under which some other company holds either 20% or more of share capital, then they shall be known as Associate Company.

If in case a company is formed by two separate companies and each such company holds 20% of the shareholding then the new company shall be known as Associate Company or Joint Venture Company. The Companies Act 2013 for the first time had introduced the concept of the Associate Company or Joint Venture Company in India through section 2(6). A company must have a direct shareholding of more than 20% and indirect one is not allowed.

For example, A holds 22% in B and B holds 30% in C. In this case, C company is an associate of B but not of A.

The Doctrine of Ultra Vires

Background: MoA of any company is the basic charter of that company. It is a binding document that narrates about the scope of that company, about which it’s written.

Ultra vires in literal sense is a Latin phrase, which means “beyond the powers”. In the legal sense, the “Doctrine of Ultra Vires” is a fundamental rule of the Company Law. It states that the affairs of a company has to be in accordance with the clauses mentioned in the Memorandum of Association and can’t contravene its provisions.

Therefore, any act or contract is said to be void and illegal if the company is doing the act, attempts to function beyond its powers, as prescribed by its MoA. So, it can be stated that for any contract or any act to not fall under this criteria, has to work under the MoA.

It is noteworthy that a company can’t be bound by means of an ultra vires contract.

Estoppel, acquiescence, lapse of time, delay, or ratification cannot make it ‘Intra Vires’ (an act done under proper authority, is intra vires).

An act being ultra vires the directors of a company, but intra vires the company itself, can be done if members of the company, pass a resolution to ratify it. Also, an act being ultra vires the AoA of a company, can be ratified by a special resolution at a general meeting.

The Disadvantage to this doctrine

This doctrine stops the company from changing its activities in a direction agreed by all members, which if done would be profitable to the company. This is because clauses of the MoA don’t allow the company to go in that direction.

If any Act done by the directors, on behalf of the company, contravenes the clauses of MoA, the MoA can be amended, by virtue of passing a resolution, pursuant to which the aforesaid Act will become intra vires, vis-a-vis MoA. This defeats the whole purpose of having such a Doctrine, as then any act can be done, no matter what, since the clauses of the MoA can be amended anytime in order to make any action legal.

Advantages of private company

 A private limited company enjoys the following advantages:

Ease of formation:

A private company can be formed merely by two persons. It can start its business just after incorporation and doesn’t have to wait for the certificate of com­mencement of business.

Greater flexibility:

There are comparatively lesser legal formalities which are to be performed by a private company as compared to the public company. It also enjoys special exemptions and privileges under the company law. Thus it can be concluded that there is a greater flexibility of operations in a private company.

Quick decisions:

In a private company, lesser number of people are to be consulted. The core people of the company who are to make decisions have a closer relationship (so to say) and thus a better mutual understanding hence, obtaining consent is usually not a problem therefore it makes the process of making decisions faster.

Secrecy:

A private company is not required to publish its accounts or file several docu­ments. Therefore, it is in a much better position than a public company when it comes to the maintenance of business secrets.

Continuity of policy:

Same core people (having close relations) continue to manage the affairs of a private company. Due to their close relations, the continuity of policy can be maintained, as there is a mutual trust and a low dispute- attitude.

Personal touch:

There is comparatively, a greater personal touch with employees and customers in a private company. There is also a comparatively greater incentive to work hard and for taking initiative in the manage­ment of business.

When private limited company becomes a public limited company

The private limited company is usually preferred by businessmen because of all the special privileges it enjoys. In private limited company, the capital is derived from close friends, relatives and known persons and not from the public. Therefore, the Companies Act, 1956 does not impose stringent rules and regulations on private limited companies when compared to Public limited companies. However, in certain circumstances, a private limited would become a public company.

They are:

  1. Conversion by default
  2. Conversion by operation of law
  3. Conversion by choice or by option

Conversion by default

A private company:

  1. Restricts the right to transfer shares,
  2. Limits the maximum number of members to 50,
  3. Prohibits inviting the public for subscription of shares or debentures.

Upon the violation of any of these terms, a private company would become a public Company by default.

Conversion by operation of law: Deemed Public Company

A private company is converted into a public company (by the operation of law):

When equal to or more than 25% of the paid-up share capital of a private company is held by one or more public companies,

When the average of total turnover of a private company is more than or equal to Rs.25 crores for three consecutive years,

When the private company holds more than 25% of the paid-up share capital of a public company.

When the private company invites, accepts or renews the deposits from the public.

Conversion by Choice or Option

If desired, then out of its own free will, a private company, can get itself converted into a public company. Generally, when private companies want to expand and therefore require more capital resources, the private companies  by themselves can convert themselves into public companies.

By becoming public companies, they (the private companies) can issue shares or debentures to the public and hence can get the amount of capital required. In India, many organizations which have commenced their operations as private companies, got themselves converted into public limited companies in order to expand and diversify.

Any private company which desires to get converted into a public company has to make the necessary changes in its  Articles and follow the below mentioned steps:

  1. It should call for a general meeting and therein pass a special resolution by following proper protocols, hence alter the Articles.
  2. The copy of the resolution along with amended Articles is to be then filed with the registrar within 30 days of passing the special resolution.
  3. The number of members should be increased to 7.
  4. The company has to apply to the registrar, in order to obtain a fresh certificate of incorporation wherein the word ‘Private’ is deleted from its name.

Conversion of public into a private company

Certain pre-requisites for filing an application for conversion from Public to Private Company :

Limit of Shareholders:

Although no limit for maximum strength of Shareholders in a Public Limited Company is there, however, post-conversion into Private Limited Company, it becomes mandatory to ensure that the maximum strength doesn’t cross the threshold of 200 shareholders.

Non-invitation of funds from Public:

Post conversion, no funds/capital should be raised from the  general public, either through the issuance of prospectus or any other means.

Non- listing of Company:

Prior to conversion, it must be assured that the company was never listed on Stock Exchange and if it all it was listed, all necessary procedures were complied for delisting of the shares in accordance with the applicable e- laws, as prescribed by the Securities Exchange Board of India (“SEBI”).

Procedure for conversion of public limited company to private limited company:

Steps for Conversion

Step 1

The first step is to hold a meeting of the Board of Directors (“BOD”) of the Company for the following purposes:

  • For considering the reason of conversion and suitable alterations in the Memorandum of Association (“MOA”) and Articles of Associations (“AOA”) of the Company reflecting the changes arising due to conversion;
  • To provide authorization for filing the necessary application for conversion with the adjudicating authority.

Step 2

Next step essentially is to hold a General Meeting of Shareholders of the Company for obtaining their consent to the said conversion and the necessary alterations in the MOA and AOA, by means of passing a special resolution.

Step 3

To fill the  prescribed e-form with Registrar of Companies (“ROC”) within 30 days of the passing of the aforesaid special resolution.

Step 4

To file an application for conversion to the adjudicating authority within 60 days from the date of passing special resolution in the General Meeting of Shareholders. However, before proceeding with filing of the application, the company must at least 21 days before the date of filing application with RD, advertise notice of conversion both English and other regional newspaper widely circulating in the state wherein the Registered office of the Company is situated.

Step 5

The Company must serve individual notice of conversion to each of its Creditors by registered post. Further, the Company must also serve individual notice of the conversion to both; the RD and ROC or any other authority which regulates the Company by registered post.

Step 6

Post the necessary publications and serving of notice of conversion, the company shall within 60 days file the Application for conversion with Regional Directorate (“RD”) in the prescribed e- form, from the date of passing special resolution along with the following documents:

  1. The Draft copy of altered MoA and AoA of the Company and copy of the Minutes of General Meeting of Shareholders wherein the said conversion was approved by the Shareholders;
  2. Copy of board resolution giving the authorization to file such an application with RD;
  3. Prescribed declarations from Directors/KMP (key management personnel) of the Company with respect to restriction of total number of members to 200, non-acceptance of deposits in violation of the law and various other matters as elucidated under the relevant section of the Act;
  4. list of creditors drawn not older than 30 days from the date of filing Application supported by an Affidavit which duly verifies the said list.

Step 7

In case no objections are received, then the RD shall pass an order duly approving the application within 30 days from the date when the application was received.

Step 8

On the receipt of order, the same is to be filed with the ROC in the prescribed e-form within 15 days from the date of order. ROC will then close the former registration and issue a fresh certificate of incorporation, thereby evidencing the conversion from Public Limited Company to Private Limited Company.

Step 9

The Company has to now apply for conversion in the database of all tax authorities i.e. PAN/TAN, and all other registrations. The company has to ensure that the letterheads, invoices, name plate, and/or any other correspondences are amended/altered and undertake the necessary updation of bank records.

Foreign companies

A foreign company, as per The Companies Act, 2013 means a company or a corporate body which is incorporated outside India which either has a place of business in India whether by itself or through an agent, either physically or through an electronic mode and conduct any business activity in India in any other manner.”

Accounts of foreign company

Section 381 of The Companies Act, 2013 states the rules or instructions about how a foreign company’s accounts are to be handled. It states that:

  1. Every foreign company must, in every calendar year;

(a) make a balance sheet and profit and loss account in such a form which contains all such particulars and includes or has annexed or attached thereto such documents as may be prescribed,

(b) must deliver a copy of those documents to the Registrar, provided that the Central Government may, by notification, direct that, in case of any foreign company or class of foreign companies, the requirements of above- pointer “a” wouldn’t apply, or would apply subject to such exceptions and modifications as may be specified in that notification.

  1. If any document as is mentioned in Section 381(1) of The Companies Act, 2013 is not in the English language, there shall be annexed to it, a certified translation thereof in the English language.
  2. Every foreign company shall send to the Registrar along with the documents required to be delivered to him under sub-section (1), a copy of a list in the prescribed form of all places of business established by the company in India as at the date w.r.t. reference to which the balance sheet referred to in sub-section (1) is made out.

 Prospectus of company

Types of Prospectus under the Companies Act, 2013

There are mainly four types of a prospectus, as discussed in The Companies Act, 2013, which are as under:

  1. Abridged Prospectus: Mentioned in Section 2(1) of the Act,
  2. Deemed Prospectus: Mentioned in Section 25(1) of the Act,
  3. Shelf Prospectus: Mentioned in Section 31 of the Act
  4. Red Herring Prospectus: Mentioned in Section 32 of the Act.

Matters which must be stated in a prospectus

  • We find the matters which must be stated in a company’s prospectus, under the Companies Act, 2013, under which;
  • Every prospectus which is issued by or on behalf of a company must be dated and that date would, unless the contrary is proved, be regarded as the date of its publication.
  • It shall state such information and set out such reports on financial information as may be specified by the Securities and Exchange Board of India in consultation with the Central Government.
  • Every director or proposed director his agent must sign a copy of the prospectus and that copy of prospectus must be delivered to the registrar on or before the date of publication.
  • It is important that every prospectus that is issued to the public should mention that a copy of the prospectus along with the specified documents have been filed with the registrar.
  • If the prospectus has a statement which is made by an expert, then that expert must not be engaged, interested in the formation or promotion or in the management of the company. A written consent of the expert should also be obtained before issuing the prospectus with the statement.
  • It is important to note that a prospectus must not be issued more than 90 days after the date on which a copy of that prospectus is delivered for registration. If a prospectus is issued it will be deemed to be a prospectus whose copy has not been delivered to the registrar.
  • A prospectus should make a declaration pertaining to the compliance of the provisions of the Act. The declaration should also state that nothing contained in the prospectus is in contravention of the provisions of the Companies Act, Securities Contracts (Regulation) Act, 1956 and Securities Exchange Board of India Act, 1992.
  • A company can vary the terms of a contract, which are referred to in the prospectus or objects for which the prospectus was issued, provided the approval of an authority which is given by the company in general meeting by way of special resolution is obtained. For further reference, click here.

Offer of Indian Depository Receipts (Section- 390):

The Central government makes the rules for: 

  1. The offer of the Indian Depository Receipt;
  2. The requirement of disclosure in prospectus or letter of offer issued in connection with Indian Depository Receipt;
  3. The manner in which Indian Depository Receipt shall be dealt with in a depository mode and by custodian and underwriters; and
  4. The manner of sale, transfer or transmission of Indian Depository Receipts,

by a company either incorporated, or which is to be incorporated outside India, whether the company has or has not been established or, will or will not establish any place of business in India.

Government Companies

A “Government company” is defined under Section 2(45) of the Companies Act, 2013 as “any company in which not less than 51% of the paid-up share capital is held by the Central Government, or any State Government or Governments, or partly by the Central Government and partly by one or more State Governments, and includes a company which is a subsidiary company of such a Government company”.

Government Company is that company or an organization in which at least 51% of the paid-up share capital is held by the central or state government or partly by both central and state government. Examples for government companies are Steel Authority of India Limited, Bharat Heavy Electricals Limited, etc.

Features of a Government Company

There are several features of a government company which are helpful in increasing the potential and efficiency of the company to a great extent.

Separate legal entity

Perhaps one of the most important features of a government company is that a government company is a separate legal entity, which helps a government company in dealing with many legal aspects. One main legal aspect is the non-dependence on any other body, in legal terms as it is a separate entity in itself, this makes the system more fluent and better efficient.

Incorporation under The Companies Act 1956 & 2013

A government company is incorporated under “The Companies Act, 1956 & 2013”. This gives government company boundaries to work under and hence it profits the end-users of the services, as their are lesser chances of fraud or improper working. Also, the employees get better working conditions and are not exploited, as they have Law as their back- up, to protect them.

Management as per provisions of The Companies Act

Management, in a government company, is governed and regulated by the provisions of The Companies Act. This makes sure that employees are not exploited and overburdened. This further ensures the smooth functioning of the company.

Appointment of employees

The appointment of employees is governed by MoA and AoA (Memorandum of Association and Articles of Association). This ensures a fair appointment on the basis of meritocracy and people don’t misuse their contacts and enter government company.

Fund Raising

A government company gets its funding from the government and other private shareholdings. The company can also raise money from the capital market. Hence, a government company has several fund raising mechanisms, which helps it to be financially less burdened as finances in a government company can be raised with a lot of ways.

Limitations of a Government Company

  • Government company usually has to face a lot of government interference and has the involvement of too many government officials. Hence, it has to go through lots of checks in order to make a stable decision. Governmental decisions are usually late as they follow an elaborate procedure before actual implementation.
  • These companies evade all constitutional responsibilities of not answering to the parliament because these companies are financed by the government.
  • The efficient operations of these companies are hampered, as the board of such companies comprises mainly of politicians and civil servants, who have special emphasis and interest in pleasing their political party’s co-workers or owners and are less concentrated on growth and development of the company. They (politicians and civil servants) essentially are focussed on their promotions which essentially is in the hands of their seniors, hence they keep on pleasing their seniors. In order to please their seniors, they usually make wrong decisions too.

Holding company and subsidiary company

Section 2 (46) of The Companies Act, 2013 defines holding company as, “Holding company, in relation to one or more other companies, means a company of which such companies are subsidiary companies”.

According to Section 2 (87) of The Companies Act, 2013;

“Subsidiary company or subsidiary in with respect to any other company (that is to say the holding company), means a company in which, either the holding company controls the composition of the Board of Directors or exercises/controls more than half of the total share capital either on its own or together with one or more than one of its subsidiary companies:

Provided that such class or classes of holding companies as may be prescribed shall not have layers of subsidiaries beyond such numbers as may be prescribed.

Further Explanation

  • The composition of a company‘s Board of Directors would be deemed to be controlled by another company if that other company by the exercise of some power exercisable by it at its discretion can appoint or remove all or a majority of the directors;
  • The expression “company” includes any body corporate;
  • ”Layer” in relation to a holding company means its subsidiary or subsidiaries”

What Is a Subsidiary company ?

A subsidiary company is that company which is both owned and controlled by another company. The owning company is called a parent company or a holding company.

The parent of a subsidiary company may be the sole owner or one of several owners, of the company. If a parent company or holding company owns the full other company, that company is called a “wholly-owned subsidiary.”

There is a difference between a parent company and a holding company, in terms of operations. A holding company has no operations of its own and it owns a controlling share of stock and holds assets of subsidiary companies.

A parent company is simply a company that runs a business and owns another business — the subsidiary. The parent company has its own operations , and the subsidiary may carry on a related business. For example, the subsidiary might own and manage property assets of the parent company, to separate the liability from those assets. 

Holding company and subsidiary has certain common grounds on which they share relationship, such as;

Consolidated Balance Sheet

It is the accounting relationship between the holding company and the subsidiary company, which shows the combined assets and liabilities of both companies. The consolidated balance sheet shows the financial status of the entire business enterprise, which includes the parent company and all of its subsidiaries.

Management and Control

The autonomy of a subsidiary company may seem to be merely theoretical. Besides the majority stockholding, the holding company also controls important business operations of a subsidiary. For example, the holding company takes the charge of preparing the by-laws which governs the subsidiary, especially for matters pertaining to hiring and appointing the senior management employees.

Responsibility

The subsidiary and holding companies are two separate legal entities; any of them may be sued by other companies or any of these companies may sue others. However, the parent company has the responsibility of acting in the best interest of the subsidiary by making the most favourable decisions which affect the management and finances of the subsidiary company. The holding company may be found guilty in a court, for breach of fiduciary duty, if it does not fulfil its responsibilities. The holding company and the subsidiary company are perceived to be one and the same if the holding company fails to fulfil its fiduciary duties to the subsidiary company.

Investment in holding company

A subsidiary company can’t hold shares in its holding company. Any company can, neither by itself nor through its nominees, hold any shares in its holding company and no holding company shall allot or transfer its shares to any of its subsidiary companies and any such allotment or transfer of shares of a holding company to its subsidiary company would be void:

Provided that nothing in this subsection shall apply to a case;

(a) where the subsidiary company holds such shares as the legal representative of a deceased member of the holding company; or

(b) where the subsidiary company holds such shares as a trustee; or

(c) where the subsidiary company is a shareholder even before it became a subsidiary company of the holding company:

Illegal associations

Illegal associations are taken care of by section 464 of The Companies Act, 2013. This section states that no company, association or partnership consisting of more than 50 people be formed in order to carry on any business for gain unless it is registered under The Indian Companies Act. It may also be registered under some other Indian law too. For example, a limited liability partnership, which is formed for carrying on business for gain by professionals, registered under the Limited Liability Partnership Act, 2008 is a legal body corporate. There is no limit to the maximum number of members in such a limited liability partnership. The objective of such associations must be to carry on a business for gain. Section 464 doesn’t apply to Non- Profit- Organizations or Charitable Associations because the objective is not earning profit.

Rules for counting the number of people

  • A person, either natural or artificial (an artificial person is an entity created by law and given certain legal rights and duties of a human being. It can be real or imaginary and for the purpose of legal reasoning, is treated more or less as a human being. For example, corporation, company, etc.), would be treated as one person. Therefore, a company is treated as a single person.
  • Similarly, a joint Hindu Family managed by Karta is also treated as a single person.
  • If two or more joint hindu families form an association, all the adult members of the family would be taken into consideration while counting the number of members.
  • It is also important to note that any partnership firm is not a separate legal entity. All the partners would be treated as different persons.
  • If two or more persons hold a share jointly, they would be treated as one single person.

Consequences of an Illegal Association;

No Legal Existence:

Any Illegal association cannot enter into binding contracts. Neither the association nor the members can file a suit against a third-party who has contracted with it. One member cannot sue other member in respect of any matter connected with the association. Further, a member cannot file a suit against the association.

Unlimited Personal Liability of the Members:

The liability of the members is unlimited. Every member of such an association is personally liable for all the liabilities incurred in the business. The third party can take action against the members. If the number of members in an illegal association comes within the statutory limit, the illegal association would not become legal merely by virtue of such reduction.

Case Law

In Badri Prasad v. Nagarmal, the Supreme Court held that in the case of an illegal association no relief will be granted to its associates or members as the contractual relationship on which it is founded is illegal (ab – initio), but subscribers will be entitled to sue for recovery of their subscriptions.

Conclusion

We, hence, saw different kinds of companies and their functions. We saw that each one is important and is one of a kind. Every company is important for Global development. We can hereby conclude that The Companies Act, 2013 is extremely important as it gives a boundary to companies because of which their legal scope remains defined. This defined scope, ultimately helps the end-users as the companies have a legal framework under which they are bound to work. Hence, these companies remain under a certain boundary wall and hence they don’t misuse their power. Thus it helps in many ways like the employees get protected in terms of their labour rights, the end-users get good quality products and the society as a whole face comparatively less company-related fraudulent issues because the law has got it all in its hands. The companies Act of 2013, replacing The Company law of 1956, has given wonderful amendments which have improved the “quality of this law” to a great level.

Companies Act is required because it provides for class action suits for shareholders which means that The Companies Act, 2013 narrates concept of class actions suits in order to make shareholders and other stakeholders, more informed and knowledgeable about their rights.

The said Act provides more power to shareholders. It stipulates appointment of at least one woman Director on the Board (for certain class of companies), hence it improves women’s employment in the corporate sector. It stipulates certain class of companies for spending a certain amount of money every year on activities or initiatives which reflects corporate social responsibility. It has introduced the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal in order to replace the company Law Board for industrial and financial reconstruction. Such tribunals relieve the courts of their burden and simultaneously provides specialised justice. It permits cross border mergers, in both ways; a foreign company merging with an Indian Company and vice versa, but with the prior permission of RBI.No independent director shall hold office for more than two consecutive terms of five years.

It states that all the listed companies should have at least one-third of the board as independent directors. Such other class or classes of public companies as prescribed by the central government shall also be required to appoint independent directors.

It states that at least seven days’ notice to call a board meeting must be given. The notice may be sent by electronic means to every director at the address under which he is registered in the company. Another beauty of this The Companies Act, 2013 is that it doesn’t restrict an Indian company from indemnifying (compensate for harm or loss) its directors and officers like The Companies Act, 1956. It also provides for the rotation of auditors and audit firms in case of publicly traded companies. It prohibits auditors from performing non-audit services to the company where they are an auditor to ensure independence and accountability of auditor. It makes the entire process of both rehabilitation and liquidation of the companies in the financial crisis, time-bound.

Bibliography

Types of Companies:

On the basis of size or number of members in a company- 

http://www.economicsdiscussion.net/company/types-of-companies/31784

Associate company-

https://www.caclubindia.com/articles/an-overview-on-associate-company-27387.asp

https://www.setindiabiz.com/learning/associate-company/

Ultra Vires-

https://www.toppr.com/guides/business-laws/companies-act-2013/doctrine-of-ultra-vires/

Circumstances under which a private limited company becomes a public limited company-

https://accountlearning.com/under-what-circumstances-a-pvt-company-be-converted-to-public-company

Conversion by Operation of Law or Private Company to be Deemed Public Company:

https://www.businessmanagementideas.com/organisation/types/conversion-of-a-private-company-into-a-public-company/8936

http://www.mca.gov.in/SearchableActs/Section381.htm

Prospectus of a company- 

https://blog.ipleaders.in/information-prospectus-company/

Government Companies-

https://www.toppr.com/guides/business-studies/private-public-and-global-enterprises/government-company/

http://www.arthapedia.in/index.php?title=Government_Company

Holding company and subsidiary company-

https://smallbusiness.chron.com/relationship-between-holding-subsidiary-company-14683.html

https://blog.ipleaders.in/difference-between-holding-and-subsidiary-company/

Illegal Association-

https://www.owlgen.com/question/write-a-note-on-illegal-association

Salient Features of Indian Company Act, 2013-

https://www.clearias.com/indian-companies-act-2013-salient-features/

Referred books:

  • Company Law

Author: Avtar Singh

Publication: Easter Book Company

15th Edition

  • The Companies Act, 2013 (Bare Act)

Publication: Universal Law Publication

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