1. Introduction to Company
A company is an artificial legal person created under the Companies Act, 2013. It has a separate legal identity distinct from its members and directors. The company can own property, enter into contracts, sue and be sued in its own name.
Watch Full Video:
2. Essential Legal Characteristics of a Company
2.1 Separate Legal Entity
- Company exists independently of its members.
- Liability of shareholders is separate from company liability.
2.2 Artificial Legal Person
- Company is not a natural person.
- Acts through Board of Directors.
2.3 Perpetual Succession
- Death, insolvency, or retirement of members does not affect existence.
- Ends only through legal liquidation.
2.4 Limited Liability
- Liability limited by shares or guarantee.
- Unlimited liability only if expressly provided.
2.5 Common Seal
- Official signature of company.
- Optional after amendments.
3. Ownership and Management
- Owners: Shareholders / Members
- Managers: Board of Directors
- Ownership and management are separate.
4. Incorporation and Constitutional Documents
4.1 Memorandum of Association (MOA)
- Public document.
- Defines external dealings.
- Acts beyond MOA are Ultra Vires and void.
4.2 Articles of Association (AOA)
- Internal rules and regulations.
- Acts within AOA are Intra Vires.
4.3 Certificate of Incorporation
- Issued by Registrar of Companies.
- Birth certificate of company.
5. Types of Companies
5.1 Based on Incorporation
- Chartered Companies
- Statutory Companies
- Registered Companies
5.2 Based on Liability
- Company Limited by Shares
- Company Limited by Guarantee
- Unlimited Company
5.3 Based on Control
- Holding Company – control > 50%
- Subsidiary Company
5.4 Based on Ownership
- Government Company – Government holding ≥ 51%
- Non-Government Company
Bank Locker Rules | Latest RBI Guidelines, Nomination Rules & Liability
6. Private Company vs Public Company
6.1 Number of Members
| Company Type | Minimum | Maximum |
|---|---|---|
| Private Company | 2 | 200 |
| Public Company | 7 | No Limit |
6.2 Number of Directors
| Company Type | Minimum | Maximum |
|---|---|---|
| Private Company | 2 | 15 |
| Public Company | 3 | 15 |
6.3 Paid-up Capital
No minimum paid-up capital requirement for private or public companies.
7. One Person Company (OPC)
- Always a private company.
- Single Indian citizen as member.
- Nominee mandatory.
8. Capital Structure
- Authorised Capital: Maximum capital company can raise.
- Issued Capital: Capital offered to investors.
- Subscribed Capital: Capital applied for.
- Paid-up Capital: Actual money received.
Share Premium
Excess of issue price over face value. Shareholder liability limited to face value only.
9. Company Bank Account – Key Rules
- No separate introduction required.
- Board Resolution mandatory.
- Company cheques cannot be paid over the counter.
- Cheque in company name cannot be credited to director’s personal account.
10. Registered Office
- Mandatory for all companies.
- Verification within 30 days of incorporation.
11. Charges on Company Assets
11.1 Meaning of Charge
Interest or lien created on company assets to secure a loan.
11.2 Types of Charges
- Fixed Charge
- Floating Charge
- Pari Passu Charge
11.3 Assets for Charge Creation
- Movable assets
- Immovable property
- Book debts and receivables
12. Registration of Charges – Time Limits
| Situation | Time Limit |
|---|---|
| Normal registration | 30 days |
| ROC extension | 60 days |
| Further extension | 120 days |
| Amendment Ordinance | 300 days |
Non-Registration Consequences
- Charge not recognized by liquidator.
- Secured creditor loses priority.
Pledge
No registration required as possession is with lender.
13. Satisfaction of Charge (Section 82)
- Company informs ROC within 30 days of repayment.
- ROC issues notice to charge-holder.
- Objection period: 14 days.
14. Register of Charges
- Maintained by ROC.
- Public register open for inspection.
15. Penalties for Contravention
- Company: ₹1 lakh to ₹10 lakh.
- Officer: imprisonment up to 6 months or fine ₹25,000 to ₹1 lakh or both.
16. Important Amendments
- No minimum paid-up capital.
- Common seal optional.
- Section 11 omitted; Section 10A introduced.
- Dividend payable only after adjusting past losses and depreciation.
17. Dividend Declaration (Section 123)
- Past losses must be set off.
- Depreciation must be fully provided.
18. Banking and Exam Relevance
- Account opening and lending decisions.
- Charge registration and recovery.
- Legal compliance during liquidation.
19. Key Exam Takeaways
- Remember numerical limits and timelines.
- Understand MOA vs AOA clearly.
- Focus on amendments and charge-related provisions.
Also Like:
