1. Origin Of Companies Act in India 2. What is a Company? 3. Definition & Characteristics 4. Different Type Of Entities: a. On Basis Of Liability b. On Basis Of Registration 5. Small Company 6. Private Company 7. Public Company 8. Unlimited Company 9. Foreign Company 10. Government Company 11. Holding, Subsidiary, Associate Company 12. Investment Companies 13. Promoters 14. Incorporation Of Registration 15. MOA, AOA 16. Tata Sons Vs Cyrus Mistry 17. Vodafone Tax Case

1. Abhinandan Jain – 170301001, Ankit Kumar – 170301008,
Arya Kishore Sarbadhikary - 170301015, HarshVardhan Bardia - 170301023
Nilesh Dutta – 170301030, Soumya Basu – 170301037,Tathagata Banerjee - 170301044

2. Origin Of Companies Act in India
1857
1866
1882
1913 1942
1950
1956
2008 2009
2010
2012
2013
1857
1956
2008
2012
2013
Followed the recommendations of Company
Law Committee set up in 1950
The earliest piece of legislation in India
relating to companies
Changes were proposed in
the Lok Sabha
Changes were passed
by Lok Sabha on 18th
December
Changes were
passed by Rajya
Sabha on 8th
August

3. What is Company?
• The word ‘company’ is derived from the Latin words: Com (with
or together) and Panis (bread) which means come together to
have meals.
• A group of people working together towards a common goal or
object
• Managed by its Board of Directors
• Decision power and ultimate control lies with the company
• Section 2 (20) of the Indian Companies Act, 2013 defines a
company as “a company incorporated under this Act or under any
previous company law.”

4. Definition & Characteristics
“A company is a voluntary incorporated association, which is an
artificial person created by law, with limited liability, a common
seal and perpetual succession.”
• Incorporated association
• Artificial legal person
• Separate legal entity
• Perpetual existence
• Common seal
• Limited liabilities

5. Difference Chart
Type Of Entities
Sole Proprietorship Partnership Private Company Public Company LLP
Registration Not Required Optional Required Required
Registered under LLP
Act/Rules
No. Of Members - >=2 , <101 >=2 , <201 > =7 , < ∞ “- -”
Legal Entity No Separate Entity
No Separate
Entity
Separate Entity Separate Entity
Separate Entity,
separated from
partners
Liability Unlimited Unlimited Limited Limited Limited
Raising Of Capital "--" "--"
Can raise through
Private Sources
Case raise through
Public
“--”
Other Features
Can hold property
under its own Name
Can be listed or
unlisted
Have more flexibility
than a company - less
compliance
requirements

6. • A company Incorporated and Regulated by a charter.
A “charter” is granted by a monarch
• Eg: East India Company – Chartered Company
regulated by Royal Charter
Chartered
Companies
• Works on matters of policy involving public interest.
• Either owned by state or created under special statue
passed by Act of Parliament or State Legislature
• Eg: Lic, RBI, ONGC, Electricity Supply/Generation
Co.
Statutory
Companies
• Companies that are incorporated as per the
registration process enumerated in Companies Act
2013, or any companies act before this act.
• Can be categorized broadly on basis of Access to
Capital, Number of Members, Control, Liability etc.
Registered
Companies

7. On The Basis Of Liability
Company
Limited By
Guarantee
An
Unlimited
Company
Company
Limited By
Shares
Section: 2 (21) Section: 2 (92) Section: 2 (22)
• Used primarily for NPOs
that require legal
personality.
• Does not usually have a
share capital or
shareholders, but instead
has members who act as
guarantors
• AOA must state the no. of
members.
• liability of the shareholders
of the Company is limited
towards the unpaid value of
the shares of the company.
• Can either be Public /
Private Limited companies
• Can become an unlimited
company by reregistering
and altering the MOA &
AOA
• members or shareholders
have an obligation to
meet any insufficiency in
the assets of the company
to enable settlement of
any outstanding financial
liability
• Unlike Partnership co. not
directly liable to creditors.

8. Private
Company One
Person
Company
Public
Company
Not For
Profit
Company
Govt.
Company
Foreign
Company
Small
CompanyHolding
Company
Subsidiary
Company
Associate
Company
Investment
Company
Dormant
Company
Producer
Company
On
The Basis
Of
Registration

9. SMALL COMPANY
As per section 2(85) ‘‘small company’’ means a company, other than a
public company,—
(i) paid-up share capital of which does not exceed fifty lakh rupees or
such higher amount as may be prescribed which shall not be more than
five crore rupees; or
(ii) turnover of which as per its last profit and loss account does not
exceed two crore rupees or such higher amount as may be prescribed
which shall not be more than twenty crore rupees:
Provided that nothing in this definition shall apply to—
(A) a holding company or a subsidiary company;
(B) a company registered under section 8; or
(C) a company or body corporate governed by any special Act;

10. Private Company
2(68) “private company” means a company having a minimum paid-up share
capital of one lakh rupees or such higher paid-up share capital as may be
prescribed, and which by its articles,—
(i) restricts the right to transfer its shares;
(ii) except in case of One Person Company, limits the number of its
members to two hundred:

11. PUBLIC COMPANY
• Section 2(71), a public company means a company which:
• (a) is not a private company;
• (b) has a minimum paid-up share capital of five lakh rupees or such higher paid-
up capital, as may be prescribed.
• Provided that a company which is a subsidiary of a company, not being a private
company, shall be deemed to be public company for the purposes of this Act
even where such subsidiary company continues to be a private company in its
articles
• As per section 3 (1) (a), a public company may be formed for any lawful purpose
by seven or more persons, by subscribing their names or his name to a
memorandum and complying with the requirements of this Act in respect of
registration.

12. As per section 3(2), a company formed under this Act may be either
(a)a company limited by shares; or
(b) a company limited by guarantee or
(c) an unlimited company.
The term 'Limited Company' means a company limited by shares or by guarantee.
The liability of the members, in the case of a limited company, may be limited with
reference to the nominal value of the shares, respectively held by them or to the
amount which they have respectively guaranteed to contribute in the event of
winding up of the company.
Accordingly, a limited company can be further classified into:
(a) Company limited by shares, and (b) Company limited by guarantee.
PUBLIC COMPANY CONT.

13. Unlimited company
• As per section 2(92), “unlimited company” means a company not having
any limit on the liability of its members.
• Thus, the maximum liability of the member of such a company, in the
event of its being wound up, might stretch up to the full extent of their
assets to meet the obligations of the company by contributing to its assets.
• However, the members of an unlimited company are not liable directly to
the creditors of the company, as in the case of partners of a firm.
• The liability of the members is only towards the company and in the event
of its being wound up only the Liquidator can ask the members to
contribute to the assets of the company which will be used in the discharge
of the debts of the company.
• An unlimited company may or may not have share capital.

14. Government Company
• Section 2(45) defines a “Government Company” as any company in which not
less than fifty one per cent of the paid-up share capital is held by the Central
Government, or by 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.
• Notwithstanding all the pervasive control of the Government, the Government
company is neither a Government department nor a Government establishment

15. Foreign Company
• As per section 2(42), “foreign company” means any company or body
corporate incorporated outside India which—
(a) has a place of business in India whether by itself or through an agent, physically
or through electronic mode; and
(b) conducts any business activity in India in any other manner
• Sections 379 to 393 of the Act deal with such companies.

16. HOLDING, SUBSIDIARY COMPANIES
AND ASSOCIATE COMPANIES
• On the basis of control, companies can be classified into holding, subsidiary and associate
companies.
• Holding Company - As per Section 2 (46), holding company, in relation to one or more other
companies, means a company of which such companies are subsidiary companies.
• Subsidiary Company – As Section 2 (87) provides that subsidiary company or subsidiary, in
relation to any other company (that is to say the holding company), means a company in
which the holding company—
• (i) controls the composition of the Board of Directors; or
• (ii) exercises or controls more than one-half of the total share capital either at its own or
together with one or more of its subsidiary companies:
• Provided that such class or classes of holding companies, shall not have layers of subsidiaries
beyond the prescribed limit.

17. Associate Company
• As per Section 2(6), “Associate company”, in relation to another company,
means a company in which that other company has a significant influence, but
which is not a subsidiary company of the company having such influence and
includes a joint venture company.
• Explanation to section 2(6) provides that “significant influence” means control
of at least twenty per cent. Of total share capital, or of business decisions under
an agreement.
• To add more governance and transparency in the working of the company, the
concept of associate company has been introduced. It will provide a more
rational and objective framework of associate relationship between the
companies.

18. INVESTMENT COMPANIES
An investment company is a company, the principal business of which consists
in acquiring, holding and dealing in shares and securities.
The word ‘investment’, no doubt, suggests only the acquisition and holding of
shares and securities and thereby earning income by way of interest or dividend
etc.
But investment companies in actual practice earn their income not only through
the acquisition and holding but also by dealing in shares and securities i.e. to
buy with a view to sell later on at higher prices and to sell with a view to buy
later on at lower prices.

19. Promoter
as per Section 2(69) of 2013 ACT
“Promoter” means a person –
a) Who has named as such in a prospectus or is identified by the company in the annual
return referred to in section 92; or
b) Who has control over the affairs of the company, directly or indirectly whether as a
shareholder, director or otherwise, or
c) In accordance with whose advice, directions or instructions the Board of Directors
of the company is accustomed to act.
- Provisions of sub clause (c) above shall not apply to a person who is acting
merely in a professional capacity.
According to regulation 2(1)(za) of SEBI Regulations, 2009, “promoter” includes-
i) The person/persons who are in control of the issuer;
ii) The person/persons who are instrumental in formulation of a plan or programme
pursuant to which specified securities are offered to the public.
iii) The person/persons named in the offer document as promoters.

20. Promoter : Duties
Conceptualizing the scheme for formation of a company
Arranging the subscribers to the memorandum
Preparing, executing and registering of MOA and AOA
Identifying the bankers, brokers, legal advisors and first
directors.
Makes arrangement for preparation, advt. and
circulation of the prospectus and placement of capital

21. Promoter : Liabilities
Incorporation of Company By furnishing False Information
Disclosure of Sources of Promoter’s contribution
Civil Liability for Misstatements in Prospectus
Punishment for fraudulently inducing persons to invest money
Contravention of Provisions relating to Private Placement
Criminal Liability for misstatements in Prospectus
Section 447
Section
26(1)(a)(xiv)
Section 36
Section 36,
Section 447
Section 42 (10)
Section 34
Section 447

22. Incorporation Or Registration
Within 60
days of name
reservation
Certificate of
Incorporation
and Corporate
Identification
Number
issued by RoC
after due
verification
Filing of
Documents
Obtain
approval for
name
availability
from
RoC(Form
No. INC-1)
and draft
MoA and
AoA of the
Company
Company's
name approval
Obtain Digital
Signature
Certificate to
e-file
documents
with Registrar
of Companies
DSC
Director of
Company is
required to
obtain unique
Director
Identification
Number from
Ministry of
Corporate
Affairs
DIN

23. Memorandum Of Association
Name Clause
• Section 4 (1) (a) of 2013 Act provides that a Company
should have a name not identical or undesirable in its MoA
Registered
Office Clause
• Must contain the name of the state in which the registered
Office of the Company is situated.
Object Clause
• Specifies the objects for which the Company is proposed,
scope of activities and the extent of powers
Liability
Clause
• States the liability of members, whether limited or unlimited
Capital
Clause
• States the amount of capital with which the company is
registered.
MoA lays the basic structure for regulation of the Company and
defines the limitations, powers, responsibilities and the fundamental
conditions upon which the company is allowed to operate

24. Articles Of Association
The AoA of a Company are its bye-laws that govern the
management of its internal affairs and conduct of its business
Subordinate to MoA
Defines power of officers and contract between Company
and members
Must be printed, divided into paras, numbered, stamped,
signed by MoA subscribers and witnessed and filed along
Must not contain anything illegal or ultra-vires

25. Tata Sons vs Cyrus Mistry
Shareholders of Tata Sons Ltd on September 21, 2017 voted in favour of the Tata group
holding firm becoming a private company in the first annual general meeting (AGM) under
the chairmanship of N. Chandrasekaran.
Mistry removed from the Chairmanship of Tata Sons on October 24, 2016 legally challenged
the decision calling the move a “weapon” to oppress minority shareholders and an act of
mismanagement.
This substantially reduced the powers of its shareholders — mainly former chairman Cyrus Mistry whose
family owns 18.4% stake — as Tata Sons would now only need board approval for taking crucial decisions,
bypassing shareholder consent required earlier according to the Companies Act, 2013
Tata Sons, the holding company of Tata Group, passed a resolution to convert itself from a
public limited company to a private limited one on September 21, 2016.

26. Vodafone Tax Case
• Vodafone decided to buy Hutchison Essar Limited (HEL) a.k.a. Hutch for
Rs. 55,000 cr in 2007.
• To evade taxes, Vodafone bought Hutch’s intermediate company in
Cayman Islands (tax heaven country) in 1998 called CGP Investment
Holding (67% shares of Hutch).
• Vodafone had to pay Rs. 25,000 million when it lost a case of tax evasion
filed by the Income Tax Department of India.
• Vodafone appealed to the Supreme Court and won the case, resulting in a
loss Rs. 12,000 cr for the Indian Government.
• Vodafone leveraged the loop-hole in law which is that the Indian Income
Tax Department did not have the right to levy taxes where a foreign
company engages in an overseas transacts with an Indian company.
• Transfer of shares does not necessarily mean transfer of assets. The I-T Act
was thus amended in 2012 to close this gap.