2nd sem Company Law Chapter Meeting CHAPTER: 5 CORPORATE MEETING Meaning and Definition of Company
Likewise, a shareholder cannot be sued on contracts made by his company. The distinction between a company and its members is not confined to the rules of privity but permeates the whole law of contract. The capital of a company is divided into parts, called shares. The shares are said to be a movable property and, subject to certain conditions, freely transferable, so that no shareholder is permanently or necessarily wedded to a company. When the joint-stock companies were established, the object was that their shares should be capable of being easily transferred, [In Re. In other words, a shareholder is liable to pay the balance, if any, due on the shares held by him, when called upon to pay and nothing more, even if the liabilities of the company far exceed its assets.
[Here, the first ‘King’ is used to refer to the individual monarch and the second ‘King’ refers to the office of king, i.e., the institution of monarchy.] In the above circumstances, the legal heirs of the deceased shareholders will become the members. The company, though a juristic person, does not possess the body of a natural being. Being an artificial person, it has to depend upon natural persons, namely, the directors, officers, shareholders etc., for getting its various works done. However, these individuals only represent the company and accordingly whatever they do within the scope of the authority conferred upon them and in the name and on behalf of the company, they bind the company and not themselves.
Characteristics of Effective Meetings
Without passing resolutions company cannot take any decision. Every company has to comply with rules regarding resolution otherwise company will have to face consequences of not complying with the law. A public company is free to transfer its share from one person to another, whereas, in a private company, the right to transfer shares is restricted.
It should be noted that the Act even allows a company to be formed and registered for the promotion of commerce, art, science, sports, religion or charity, etc., for purposes other than profit making. Put simply, no 3 weeks must pass with no directors’ meeting being kept, and no year ought to expire without a minimum of 4 directors’ group meetings having been kept in it. A notice of twenty one days must be provided to users indicating the dynamics and specifics of the resolutions being talked about. The specific resolutions passed at Extraordinary General Meeting need to be submitted with the Registrar within fifteen days. Extraordinary meeting is a common meeting that is kept between 2 Annual General Meetings. Extraordinary General Meeting is Called to talk about any particular case of immediate value to the business.
The term conference isn’t defined someplace in the Companies Act. Ordinarily, a business might be described as gathering, coming or assembling together of 2 or perhaps more individuals for transaction and debate of certain lawful business. The meetings of creditors are called when the company proposes to make a scheme for arrangement with its creditors. In the present context it is a statement of the business to be transacted at a meeting.
In essence, a company is a voluntary association with limited liability capital divided into transferable shares, a separate legal entity, and a common seal of perpetual succession. The establishment of a company as an artificial entity is recognized by law as a legal person with rights and obligations. This means that the company is seen as a separate entity from its participants. It is possessed by at least one shareholder and supervised by at least one director. This separate legal personality means that the company has perpetual succession. A company is not affected by the shareholders’ death, disability, bankruptcy, or dissent.
- The private limited company must have an authorised share capital of Rs.1 lakh.
- This body of individuals may be incorporated or unincorporated.
- If the guarantee company also has share capital, the liability of each member shall be determined in terms of not only the amount guaranteed but also the amount remaining unpaid on the shares held by a member.
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- A Complete procedure have to follow according to law to pass any resolution.
This will give you a basic understanding of what a company is and its existence. A company’s right to sue arises when some loss is caused to the company, i.e. to the property or the personality of the company. Hence, the company is entitled to sue for damages in libel or slander as the case may be [Floating Services Ltd. v. MV San Fransceco Dipaloa 52 SCL 762 ].
2 Legal entity distinct from its members
Due to an amendment to the Companies Act, it need not have any minimum paid-up share capital. Before the amendment of the Act, it needed to have a minimum paid-up capital of Rs.1 lakh, which has now been removed. A company incorporated under the Companies Act, 2013 is treated as a separate person distinct from its members under the law. Therefore, the company will be liable for all the acts of the company except any illegal act done by the directors of the company. A company is a voluntary association formed by an individual or group of individuals.
Part-A and Part-B of the SPICe+ form can be submitted together. A company is created by law; throughout its life, carries on its affairs according to the law; and ultimately is wind up by law. A company can be terminated only by the procedure of winding up.
Therefore, the company has independent ownership and can own, enjoy and dispose of real estate on its behalf. The liability of a company can be limited by its guarantee or shares. The liability of the shareholders is limited to a certain guaranteed amount mentioned in the memorandum, payable only in the event of liquidation and losses suffered by the company.
When the company is harmed, the company has the right to sue such a person. Therefore, the company has the right to sue for damages in libel or slander on a case-by-case basis. A company cannot even have an insurable interest in the company’s property.
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Having limited liability for business debts is one of the main advantages of doing business under the corporate form of organization. The company owns its assets as a separate entity and is bound by its liabilities. Members’ responsibilities as shareholders extend to their contributions to the company’s capital up to the nominal value of the shares they hold but are not paid up. Members, even as a whole, neither are the owners of the company’s undertakings nor are they responsible for their debts. In other words, shareholders are obliged to pay the balance due on their holdings when called upon , even if the company’s liabilities far exceed its assets. The Supreme Court held in the case of Tata Engineering Locomotive Co.
All directors must have a Director Identification Number issued by the Ministry of Corporate Affairs . The company must have at least one director who is a resident of India. To investigate the affairs where it is formed for fraudulent purposes, to defeat the true work and nature of company and circumvent the law or to defraud its creditors or to avoid valid obligations. In other words, the Court investigates into the true state of affairs of the company. It has been observed that though a corporation is a distinct entity, yet in reality, it is an association of persons who are in fact the beneficial owners of all the corporate property.
There is no need to send notice, if the articles provide for meetings to be held at regular intervals’ e.g., monthly, the time and place being fixed. Also, if all the directors should meet casually, and are willing to hold a meeting, the meeting can be held notwithstanding the characteristics of a company meeting are the absence of notice. A notice of 21 days has to be given to members indicating the nature and particulars of the resolutions to be discussed. The special resolutions passed at Extraordinary General Meeting have to be filed with the Registrar within 15 days.
Meetings can be the most potent breeding ground of ideas and innovations for any company, while offering an opportunity for employees and executives to have an interactive exchange of opinions not found anywhere else, but only when they’re done right. Hence, in the spirit of spurring more efficient meetings than most are fortunate enough to be a part of, here are 7 characteristics found in any effective workplace meeting. 4.2 Prevention of fraud or improper conduct – Where the medium of a company has been used for committing fraud or improper conduct, courts have lifted the veil and looked at the realities of the situation. AIR 1967 SC 819, where the veil had been used for evasion of taxes and duties, the court upheld the piercing of the veil to look at the real transaction.
Separate legal entity.
Used in the aforesaid sense, the word ‘company’, in simple terms, may be described to mean a voluntary association of persons who have come together for carrying on some business and sharing the profits therefrom. The laws and rules entered in trust deed relate with the notice of the conference, appointment of a Chairman of the meeting, passing the resolutions, quorum of the posting as well as the meeting as well as signing of minutes. Shareholders holding a minimum of one tenth of the paid up share capital of airers4you is able to generate a requisition on the Board of Directors to convince such a conference. Again the directors who are interested in any of the resolutions to be passed at the Board Meeting shall not be counted for the purpose of quorum of that resolution. If at any time the number of interested directors exceeds or is equal to two-thirds of the total strength of directors, then the remaining directors who are not interested will be the quorum for that item, provided their number is not less than two [Sec.
It will also send the Certificate of Incorporation to the company at its registered office address. The company registration form and documents must be digitally signed. Thus, all directors must obtain a DSC before applying for registration.
And in One Person Company , the transferability of shares is not allowed. It is regarded as a legal person capable of entering into contracts, owning property in its name, suing, and being sued by others. Accordingly, the word ‘company’ is employed to represent associations formed to carry on some business for profit or to promote art, science, education or to fulfill some charitable purpose. This body of individuals may be incorporated or unincorporated. A company must be incorporated or registered under the Companies Act. Minimum number of members required for this purpose is seven in the case of a ‘public company’ and two in the case of a ‘private company’.
A company is created with the sanction of law and is not itself a human being, it is therefore, called artificial; and since it is clothed with certain rights and obligations, it is called a person. A company is accordingly, an artificial person thereupon the nature of company is artificial too. Its members are its owners however they can be its creditors simultaneously. https://1investing.in/ A shareholder cannot be held liable for the acts of the company even if he holds virtually the entire share capital. The concept of ‘Company’ or ‘Corporation’ in business is not new but was dealt with, in 4th century BC itself during ‘Arthashastra’ days. The nature of company got revamped over a period according to the needs of business dynamics.