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Therefore, the company will only be liable for the acts of a company except for any unlawful act done by the shareholders or directors of the company. In such cases, liability of the members shall not be limited to the nominal or face value of the shares held by them. In case of unlimited liability companies, members shall continue to be liable till each paise has been paid off. In case of companies limited by guarantee, the liability of each member shall be determined by the guarantee amount, i.e., he shall be liable to contribute up to the amount guaranteed by him. A company incorporated under the Act is vested with a corporate personality so it redundant bears its own name, acts under a name, has a seal of its own and its assets are separate and distinct from those of its members. Therefore, it is capable of owning property, incurring debts, borrowing money, having a bank account, employing people, entering into contracts and suing or being sued in the same manner as an individual.
However, such a meeting may be called with shorter notice, if it is agreed to by all the members to vote in the meeting. If default is made in complying with the provisions of Section 165, every director or other officer of the company who is in default will be liable to a fine which may extend to Rs. 500. At the commencement of the meeting the Board shall place a list showing the name, addresses and occupation of the members of the company and the number of the shares held by them. During the continuance of the meeting the list shall remain open for inspection by members. The assembly of persons must be for discussion and transaction of some lawful business.
An example could be that, during the war, all members of a private company were bombed at a shareholder’s meeting, but the company survived. The chief advantage of incorporation from which all others follow is, of course, the separate legal entity of the company. However, it may happen that the corporate personality of the company is used to commit frauds or improper or illegal acts.
Companies (Incorporation) Rules, 2014
So one of the nature of company is that it has separate property from its members. An incorporated company never dies, except when it is wound up as per law. A company, being a separate legal person is unaffected by death or departure of any member and it remains the same entity, despite the total change in the membership. A company’s life is determined by the terms of its Memorandum of Association. An incorporated company owes its existence either to a special Act of Parliament or to company law.
All correspondences from the ROC will be sent to the address provided in the registration form. If the company address is temporary, it must establish a registered office within 30 days of its incorporation. The registered office is where the company will conduct its main affairs and keep all the company documents. Upon incorporation, a company becomes a legal entity with perpetual succession and a common seal. Since the company has no physical existence, it must act through its agents and all contracts entered by its agents must be under the seal of the company. In case of OPC, Dormant Company, Small Company, Sec. 8 Company or any private company( Start-Up), then required to hold two board meetings in each half of calendar year with time gap of at least 90 days.
- Therefore, it should be noted that an individual’s rights are not lost because he is a shareholder of the company.
- The exception is when the owner becomes aware of illegal activity and allows it to continue.
- Section, 391 to 393 of the Companies Act not just get powers on the business to compromise with the creditors but additionally place on the process to do so.
- All Indian companies are registered under the Companies Act of 2013 and work according to the procedure provided under this Act.
- The meeting cannot pass a resolution on any item or on a subject unless notice has been given according to the provisions of the Act.
The result taken in meeting and scrutinizer’s report shall be placed on the website of the company. Postal ballot shall be in the custody of the scrutinizer till chairman sign the minutes of the meeting, https://1investing.in/ after that scrutinizer shall return the same to company who will preserve postal ballots and other important documents safely. A Complete procedure have to follow according to law to pass any resolution.
What is a company
Most companies are formed with the motive of profit-making except the section 8 companies . Profit earned is divided among the shareholders or saved for the future expansion of the company. A company, being a legal entity different from its members, can enter into the characteristics of a company meeting are contracts for the conduct of the business in its own name. A shareholder cannot enforce a contract made by his company; he is neither a party to the contract nor be entitled to the benefit derived from of it, as a company is not a trustee for its shareholders.
Shareholders holding at least one-tenth of the paid-up share capital of the company can make a requisition to the Board of Directors to convince such a meeting. It is a meeting of shareholders which is held once in a year. The object of holding this meeting is to review the progress and prospects of the company and elect its office-bearers for the coming year. A public company which was registered as a private company earlier.
2 Legal entity distinct from its members
All legal proceedings against the company are to be instituted in its name. Similarly, the company may bring an action against anyone in its own name. The membership of an incorporated company may change either because one shareholder has sold/transferred his shares to another or his shares devolve on his legal representatives on his death or he ceases to be a member under some other provisions of the Companies Act.
A company has a right to seek damages where a defamatory material published about it, affects its business. However, a person duly authorized to execute documents pursuant to a power of attorney granted in his favour under the common seal of the company may execute such documents and it is not necessary for the common seal to be affixed to such documents. 43 held that “no member can claim himself to be the owner of the company’s property during its existence or in its winding-up”.
It, therefore, formed a subsidiary company and the application for licences was made in the name of the subsidiary. 12] – As per section 12, a company shall have its name printed on hundies, promissory notes, bills of exchange and such other documents as may be prescribed. A company being an artificial person is not bestowed with a body of a natural being. It has to work through the agency of human beings, namely, the directors and other officers and employees of the company. Where a decree has been issued by the Court in respect of sums due against a company, the same cannot be enforced against its managing director – In H.S. Sidana v. Rajesh Enterprises 77 Comp.
Since an artificial person is not capable of doing anything illegal or fraudulent, the facade of corporate personality might have to be removed to identify the persons who are really guilty. The above definitions clearly bring out the meaning of a company in terms of its features. A company to which the Companies Act applies comes into existence only when it is registered under the Act. On registration, a company becomes a body corporate i.e., it acquires a legal personality of its own, separate and distinct from its members.
There is thus, a veil between a company and its members keeping them both separate from each other. However, sometimes it becomes necessary to lift this veil, disregard the distinct corporate entity of the company and find out the realities of the company. The court may investigate the real affairs, ownership, etc., of the company. The company being a separate person, its members are not as such liable for its debts.
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Company being an artificial person cannot be incapacitated by illness and it does not have an allotted span of life. Being distinct from the members, the death, insolvency or retirement of its members leaves the company unaffected. Even where during the war all the members of a private company, while in general meeting were killed by a bomb, the company survived. “King is dead, long live the King” very aptly applies to the company form of organisation.
Meeting can be attended by directors either in person, or through audio-visual mode or through video conferencing, subject to the nature of meeting being discussed and after complying with necessary formalities as specified in Sec.173 r/w such rules. QUOTAS – Meetings can often encourage even the most dedicated of employees to doze off and perhaps complete their sleep with their unorganised and inefficient nature. A major reason for this might be the fact that active participation from attendees is not something seen often in formal workplace meetings, and contradicting this very flaw could be the resolution of many efficiency issues that hamper meetings. It was held that since both the decision-making bodies, the Board of directors and the general body of shareholders were controlled by Germans, the company was a German company and hence an enemy company. Accordingly, the suit filed by the company to recover a trade debt was dismissed on the ground that such payment would amount to trading with enemy. In the case of unlimited liability companies, members shall continue to be liable till each paisa has been paid off.