Limited Companies

Limited Companies–
A limited company is an artificial person with perpetual succession incorporated under the Companies Act.–
Company is a legal person, created through process of incorporation for which Registrar of Companies issues Certificate of–
Incorporation.–
Shareholders are owners of the Company and directors are agents of the company to manage company.–
A limited company may be private limited or public limited.–
Members in a private limited company: minimum 2; maximum excluding employees can be 50.–
Members in a public limited company: minimum 7 and there is no ceiling on maximum number.–
Number of Directors: A private limited company should have minimum 2 directors whereas a public limited company should have minimum 3 directors. No limit on maximum number of directors. In a public limited company, if directors are more than 12, permission from central govt required.–
Public company: When minimum 51% shares with government.–
Documents for opening the account: Memorandum of Association, Articles of Association, Certificate of Corporation, Certificate of Commencement of Business (only for public limited companies) and Board Resolution. No introduction is required as Certificate of Incorporation is enough introduction. However, KYC norms to be applied on all persons authorized to operate–
the account.–
Memorandum of Association: It contains name of the Company, its authorised capital, registered office and liability of shareholders, objects of the company etc.–
Ultra Vires: Anything done by the directors beyond the objects stated in the memorandum of association is called ultravires–
The directors can not delegate their authority to any other person.–
In case a director dies, the cheques signed by him presented for payment can be paid if these are dated prior to his death.–
If a director stops authority of other director it is of no use. Bank will allow operations as per Board Resolution.–
Common Seal of the Company is to be affixed on documents as per Articles of Association or Board Resolution.–
Cheque favouring company should not be credited to the personal account of the director. Such cheques should not be paid in cash. These should be credited to the account of company only.

Accounting & Finance for Banking

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