Company

 The word company is derived from the Latin word Companies.

Com- With or together
Panis- bread

 Companies Act till now-

1) The Companies Act,2013
2) The Companies Act, 1956
3) The Companies Act, 1913
4) The Companies Act, 1866

Adv. Dr. Sandip Yadav KJSAC

the Companies Act,2013
 Applicable to…
1) Companies incorporated under this Act or under any
previous company Law
2) Insurance companies
3) Banking companies
4) Companies engaged in the generation or supply of
electricity
(JSW, Reliance Power, Tata Power)

Adv. Dr. Sandip Yadav KJSAC

 The Companies Act, 2013
 Company Meaning

 Justice James- A company is an association of persons united for

a common object.

 Section 2(20)- Company means company incorporated-

Under this Act or
Under any previous company law.

Adv. Dr. Sandip Yadav KJSAC

 Professor Haney- A company is an artificial person
created by law, having-
separate identity and
perpetual succession.

Adv. Dr. Sandip Yadav KJSAC

Features of a company
1) Registration.
2) Artificial person
3) Separate Legal Entity
(Salomon V. Salomon & Co.Ltd)
Sold his business : 30000
purchase shares: 20000
debenture : 10000
unsecured creditor : 7000
Assets : 6000
Liabilities: 17000
4) perpetual Succession
 5) Limited Liability

Nature of Company Extent of liability of Member

Company limited by shares Amount unpaid on the shares held by

every member
Company limited by guarantee and not Amount Guaranteed by every member
having share capital
Company limited by guarantee and having Aggregate of amount unpaid on the
share capital shares held by a member and the
amount guaranteed by him
Unlimited liability Every member is liable to contribute to
the assets of the company until all the
debts of the company are paid in full

Adv. Dr. Sandip Yadav KJSAC

6) Transferability of Share

7) Separate Management

8) Separate Property

9) Capacity to sue and be sued

10) Common Seal

Adv. Dr. Sandip Yadav KJSAC

 Types of Company
Number Liability Listing of
Mode of Other
of of Control Shares on the
Incorporation Stock Market Companies
Members Members

Company
Statutory Private Holding Listed Government
Limited by
Company Company Company Company Company
Shares

Company
Registered Public Subsidiary Unlisted Foreign
Limited By
Company Company Company Company Company
Guarantee

One
Unlimited Dormant
Person
Company Company
Company

Adv. Dr. Sandip Yadav KJSAC

On the basis of mode of Incorporation
1) Statutory Companies: Statutory companies are those
companies which are incorporated by a special Act of the
parliament or state legislature.

Example:1) Reserve Bank of India(1934)

2) State Bank Of India (1955)
3) Life Insurance Corporation Of India (1956)
Power and Functions- By the Act
No Memorandum
No use of word ‘Limited’
Applicability of Companies Act, 2013

Adv. Dr. Sandip Yadav KJSAC

 On the basis of mode of Incorporation
2)Registered Company: “Registered companies are those
companies which are registered under the provisions of
Companies Act, 2013 or any previous company Law.”
All existing companies other than statutory companies are
registered companies.
However there are special provisions in case of Electricity
companies, Insurance Companies and banking
companies.
Incorporated under Companies Act
For most of the operative matters, it is governed by the
provisions of Electricity Supply Act, 1948
Insurance Act, 1938
Banking Regulation Act, 1949
 On the basis of number of members

1)Private Company means a company having a minimum

paid up share capital as may be prescribed, and which by its
articles-
1) Restricts the right to transfer its shares
2) Except in case of one person company, limits the number
of its members to two hundred.
3) Prohibits any invitation to the public to subscribe for any
securities of the company

Adv. Dr. Sandip Yadav KJSAC

 On the basis of number of members
2)Public Company – Public Company means a
company which-
a) is not a private company
b) has a minimum paid up share capital as may be
prescribed.

Adv. Dr. Sandip Yadav KJSAC

 On the basis of number of members

3) One Person Company: One person company means a

company which has only one person as member.
Who can become a member/ Nominee of OPC
1) Natural Person
2) Indian Citizen
3) Resident of India from not less than 120 days.
4) Major
 It is a private Company.
 Nominee
Adv. Dr. Sandip Yadav KJSAC
 Difference between Private and Public Company
Sr. Basis of distinction Private Public OPC
No Company Company
1 Minimum number of 2 7 1
members

2 Maximum number of 200 No Limit 1

members

3 Minimum number of 2 3 1
directors
4 Transferability of shares Restricted Freely --
transferable
5 Invitation of public for Private cannot Public can OPC cannot
subscription be invited to be invited to be invited to
subscribe to subscribe to subscribe to
securities of the securities of securities of
company the company the company
 On the basis of liability of members
1) “Company limited by shares” means a company having
the liability of its members limited by the memorandum to the
amount, if any, unpaid on the shares respectively held by
them.
 The amount unpaid on the shares of the company, can be
called
- during the lifetime of the company; or
- even on winding up of the company.
 Most of the companies in India are incorporated as ‗
companies limited by shares‘

Adv. Dr. Sandip Yadav KJSAC

 On the basis of liability of members

2) “Company limited by guarantee” means a company

having the liability of its members limited by the
memorandum to such amount as the members may
respectively undertake to contribute to the assets of the
company in the event of its being wound up.
 The member cannot be called upon to pay anything,
before the company goes into liquidation.

Adv. Dr. Sandip Yadav KJSAC

 On the basis of liability of members
3)“Unlimited company” means a company not having any
limit on the liability of its members.
 The liability if the members is enforceable only at the time
of winding up.
 Such companies are rarely found these days.

Adv. Dr. Sandip Yadav KJSAC

 On the basis of control
1)“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 (total voting Power) either at its own or together with
one or more of its subsidiary companies.
2)“Holding company”, in relation to one or more other companies,
means a company of which such companies are subsidiary
companies.
Example:
Tata Motors- Subsidiary Company
Tata Sons – Holding company
 On the basis of access to
capital(Listing of Shares on the Stock Market)
1)“Listed company” means a company which has any of its
securities listed on any recognized stock exchange.

2) “Unlisted Company” is a company whose none of the

securities are listed on any recognized stock exchange.

Adv. Dr. Sandip Yadav KJSAC

 Other types of companies
1)“Government company” means any company in which
not less than fifty-one per cent of the paid-up share capital is
held by
i) the Central Government, or
ii) by any State Government or Governments, or
iii) 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.
Examples: MTNL (Mahanagar Telephone Nigam Limited)
BSNL (Bharat Sanchar Nigam Limited)
BHEL(Bharat Heavy Electricals Limited)

Adv. Dr. Sandip Yadav KJSAC

 Other types of companies
2) “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.

Adv. Dr. Sandip Yadav KJSAC

 Other types of companies
3) Dormant Company (Inactive Company)-Where a
company is formed and registered under this Act for
a)a future project or
b) to hold an asset or intellectual property and
c) has no significant accounting transaction, such a company
or an inactive company may make an application to
the Registrar in such manner as may be prescribed for
obtaining the status of a dormant company.

Adv. Dr. Sandip Yadav KJSAC

Memorandum of Association
(MOA)
 Important Public document of the company.
 Charter (Supreme) of the company.
 No company can registered without this document.
As per Section 2(56) of the Companies Act,2013
―Memorandum‖ means the memorandum of association of a
company as originally framed or as altered from time to
time in pursuance of any previous company law or of this
Act.
―Article‖ means the Article of association of a company as
originally framed or as altered from time to time in
pursuance of any previous company law or of this Act.
 Printing and signature of Memorandum
According to section 15 of this Act, MOA
 Must be printed
 Divided into paragraphs
 Serially numbered
 Signed by 7 members – Public Company and
2 Members – Private Company
 In the presence of at least one witness who will attest the
signature.

Adv. Dr. Sandip Yadav KJSAC

 Clauses of Memorandum
1) Name Clause
2) Registered office clause
3) Object clause
4) Liability clause
5) Capital clause
6) Subscription or Association clause

Adv. Dr. Sandip Yadav KJSAC

 Name Clause:
It indicates name of the company.
Availability of name
No company shall be registered by a name which is in the
opinion of central govt.is undesirable
1) Names which is identical with
2) To resembles with the name of the existing company
Use the word Limited/ Private Limited/ One Person
Company (Section 4)

Adv. Dr. Sandip Yadav KJSAC

 Doctrine of Ultra Vires
Ultra means Beyond or in excess of
Vires means powers
―Ultra virus means an act or transaction beyond the powers
of company.‖
An act or transaction shall be ultra vires if
- It is not permitted or authorized by the companies Act,
2013
- It falls outside the object clause of memorandum
Ashbury Railway Carriage & Iron Co.Ltd V Richie

Adv. Dr. Sandip Yadav KJSAC

 Effects of Ultra Vires transactions
1)The transaction is Void ab initio.
2) No Ratification- An ultra virus contract cannot become
valid by ratification.
3) Injunction against the Company- Any member may
obtain an injuction order from the court.
4) Personal Liability of Directors.
5) Ultra virus Property

Adv. Dr. Sandip Yadav KJSAC

 Forms of Memorandum:
The Memorandum of a company shall be in respective forms
as outlined below (Schedule I of Companies Act, 2013)
SR. Table Form
No
1 Table A MOA of a company limited by shares

2 Table B MOA of a company limited by guarantee and not having share

capital
3 Table C MOA of a company limited by guarantee and having share
capital
4 Table D MOA of an unlimited company and not having share capital

5 Table E MOA of an unlimited company and having share capital

 Forms of Articles of Association
(AOA)
Schedule I of the Companies Act, 2013 provides forms for Articles of
Association (AOA) in tables F, G, H, I and J for different types of
companies. Further, AOA must be in the respective form.
Sr.No Table Form

1 Table F Articles of Association of a company limited by shares

Articles of Association of a company limited by guarantee and having

2 Table G
share capital

Table Articles of Association of a company limited by guarantee and not

3
H having share capital

Articles of Association of an unlimited company and having share

4 Table I
capital

Articles of Association of an unlimited company and not having

5 Table J
share capital
Doctrine Of Constructive Notice
 This doctrine Protects company from outsiders.
 The memorandum and articles are public documents. Public
documents means a copy of MOA and AOA are filed with the
registrar and are open to public inspection. Any person, may a
shareholder or outsider, is supposed to inspect these documents
before entering into a contract with company.
 Doctrine of constructive Notice presumes that every person
who had dealing with the company had notice of the contents
of these documents, whether he has, in reality read them or not.
 This doctrine further said that a person dealing with company is
said ― not only to have read these documents but to have
understood them according to their proper meaning.
Adv. Dr. Sandip Yadav KJSAC
 Doctrine Of Constructive Notice
Kotla Venakataswamy V. C Rammurthi

Fact: The Articles of the company (South Indian Agricultural

and Industrial Improvement Co.Ltd) required that all the
documents and deeds of the company shall be signed by MD,
the secretary and a working director of the company.
A mortgage deed was signed by the secretary and a working
director only.
Judgement: It was held that the mortgage deed was invalid
even though the plaintiff had acted in good faith and money
was utilized for the benefit of the company.

Adv. Dr. Sandip Yadav KJSAC

 Doctrine of Indoor Management
(Turquand’s Rule)
 This doctrine Protects outsiders against company.
 This doctrine creates a presumption in favour of the outsiders.
 As per this doctrine, outsiders dealing with the company are not
required to enquire into the internal management of the
company.
 Outsiders dealing with the company are entitled to assume that
as far as internal proceedings of the company are concerned,
everything has been done regularly.
 Thus the doctrine protects an innocent outsider from any
irregularity present in the working of the company.

Adv. Dr. Sandip Yadav KJSAC

 Doctrine of Indoor Management
Royal British Bank V Turquand
Fact: The Article of the company stated that the directors could
borrow money on behalf of the company, if they are so
authorised by a resolution passed by the shareholders in General
Meeting.
The directors borrowed money from Turquand without obtaining
any authorisation from shareholders
Turquand had lent the money to the company assuming that the
shareholders had authorised the directors to borrow money as
per the requirement of the articles.
Judgement: It was held that borrowing of money by the
directors without any authorisation from the shareholders
amounted to a mere internal irregularity, and since Turquand had
no knowledge of such internal irregularity.
 Lifting of Corporate Veil
 Veil means Curtain.
 Separate Legal Entity.
 Only a company is liable for the act done in the name of
company by its members ect.
 Lifting of corporate veil means ignoring the separate identity
of a company and looking behind the real persons who are in
the control of the company.
 The corporate veil is sometimes required to be lifted to known
the real intentions of directors who formed the company with
ulterior motives.
 The courts of Law are competent to lift the corporate veil.

Adv. Dr. Sandip Yadav KJSAC

 Cases in which Corporate Veil has been
lifted
1) Prevention of Revenue / To avoid Taxes – The court may
ignore the corporate entity where it is used for tax evasion.
Sir Dinshaw Case
Sir Dinshaw, an assessee (The person who pays tax) was
receiving huge dividend and interest income on certain
investments. He formed four companies. The whole of the
investments were transferred to these private companies. The
investments and dividend received by these companies were
within the exempted limits under the Income Tax Act of that
time.
These companies did not have any business or assets except
these investments.
The income received on investments by these companies was
diverted to the assessee in the form of pretended loans. Which
were never paid back by him.
Judgement: The court held that the only purpose of
incorporating these private companies was to evade taxes. Each
of these companies was a sham. Therefore, income earned by
all these private companies was treated as the income of the
assessee.

2) Determining the character of the Company: A company

may assume an enemy character when persons in defect control
of its affairs are residents in an enemy country.

Adv. Dr. Sandip Yadav KJSAC

Daimler Co.Ltd V Continental Tyre and Rubber Co. Ltd
(1916)
A company was formed in England for the purpose of selling
tyres made by a German company. The Germen company held
the entire share capital of the England company. All the
directors were the German residents.
During the first world war, the English company commenced
an action to recover a tread debt from another English
Company.
Judgement: It was held that the corporate personality of the
company be ignored and the persons in the ultimate control of
the company shall be considered. Since the persons
controlling the company were enemies, therefore the company
was not allowed to proceed with the action.
3) Prevention of Fraud: The legal personality of a company
may be lifted where the company is incorporated for some
fraudulent purpose.
Jones V Lipman
Lipman (L) agreed to sell a certain land to Jones (J). He
subsequently changed his mind and to avoid the specific
performance of contract, he sold it to a company which was
formed specifically for the purpose. The company had L and the
clerk of his solicitors as the only members.

Jones brought an action for the specific performance against L

and the company.
The court looked to the reality of the situation, ignored the
transfer and ordered that the company should convey the land to
Johes.
 Corporate Social Responsibility
(Section 135)
Every company having
1) net worth of rupees five hundred crore or more, or
2) turnover of rupees one thousand crore or more or
3) a net profit of rupees five crore or more during any
financial year shall constitute a Corporate Social
Responsibility Committee of the Board consisting of
three or more directors, out of which at least one director
shall be an independent director.

Adv. Dr. Sandip Yadav KJSAC

Schedule VII of Companies Act, 2013
 Activities which may be included by companies in their Corporate Social Responsibility
Policies
 Activities relating to:—
 (i) eradicating extreme hunger and poverty;
 (ii) promotion of education;
 (iii) promoting gender equality and empowering women;
 (iv) reducing child mortality and improving maternal health;
 (v) combating human immunodeficiency virus, acquired immune deficiency
 syndrome, malaria and other diseases;
 (vi) ensuring environmental sustainability;
 (vii) employment enhancing vocational skills;
 (viii) social business projects;
 (ix) contribution to the Prime Minister's National Relief Fund or any other
fund set up by the Central Government or the State Governments for
 socio-economic development and relief and funds for the welfare of the Scheduled
Castes, the Scheduled Tribes, other backward classes, minorities and women; and
 (x) such other matters as may be prescribed.
 Punishment
If company contravenes the provision of section 135 , the
punishment shall be as follows:
On Company- Rs. 50000- 25 Lakhs
On officer in default – imprisonment upto 3 years or fine
of Rs 50000 to 5 Lakhs or both

Section 450 – 10000 + 1000 Per Day(Old Punishment)

Intellectual Property
rights
Intellectual Property rights
 Copyright
 Trademark
 Patent
 Geographical Indication
 Designs
 Plant Verities
 Copy Right
Development of Copyright Law in India

 Indian Copyright Act, 1847

 Indian Copyright Act, 1914

 Indian Copyright Act, 1957

 Meaning
 According Sec. 14 of Copyright Act 1957,
―Copyright means the exclusive right to do or authorize
others to do certain acts in relation to:
1) Literary
2) Artistic
3) Dramatic
4) Musical
5) Cinematograph film
6) Sound recording‖.
 Meaning
Copyright is a right given by the law to creators of literary,
dramatic, musical and artistic works and producers of
cinematograph films and sound recordings. In fact, it is a
bundle of rights including rights of reproduction,
communication to the public, adaptation and translation of
the work.
Literary Work
Artistic Work
Artistic Work
Artistic Work
Artistic Work
 Literary and dramatic work – Author
 Musical work – Composer
 Artistic work – Artist
 Cinematograph film – Producer
 Sound recording – Producer
Copyright Act,1957
 Administration of the Act

Copyright office

Copyright
Board

Copyright
Society
 COPYRIGHT BOARD
Sec. 11 of the Act lay down:
 As soon as may be after the commencement of the Act, The
central government shall constitute a board to be called the
Copyright Board which shall consist of a chairman and
two other members. Min 2 Max 14.
 The Chairman of the Copyright Board shall be a person
Who is, or has been, a judge of a High Court or is qualified
for as a Judge of a High Court.
 The Central Government may after consultation with the
chairman of the copyright Board, appoint a secretary to the
copyright board and such other officers and employees as
may be considered necessary for the efficiency discharge of
the functions of the copyright Board.
 COPYRIGHT SOCIETY
It is a Voluntary association of owners of copyright which
is legally registered under the Copyright Act, 1957.
Registration of copyright society is mandatory. It can grant
license only after getting registered.
There must be at least 7 persons acting as owners of
copyright.
Examples:
1) Indian Performing Right Society Limited (IPRS).
2) NOVEX
 Duration of Copyright – Life of the author + 60 years
1) For Published Literary, dramatic, Musical and Artistic work –
Copyright shall exist the Life of the author + 60 Years.
2) Anonymous and Pseudonymous Work-
Anonymous- Author‘s identity is not disclose.
Pseudonymous- Real identity of the author is concealed.
60 Years from the date of publication.
3) Posthumous Work- When work is published after the death of the
author.
60 Years from the date of Publication.
4) Term of copyright in Cinematograph films- In case of
Cinematograph films, copyright shall subsist until 60 years from the
date of publication.
5) Term of copyright in Sound Recording- In case of Sound
Recording, copyright shall subsist until 60 years from the date of
publication.
Remedies against infringement:
 A) Civil Remedies: 1) Search and seizure order
2) Injunction, Damage order
B) Criminal Remedies: shall be punishable with
imprisonment for a term not less than six month and
which may extend to three years and fine shall not be
less than 50000 and which may extend to 2 Lakhs.
2)Trademarks
 Trade Mark
 Trade mark means a mark capable of being
represented graphically and which is capable of
distinguishing the goods or services of one person
from those of others and may include shape of goods,
their packaging and combination of colors. -Section
2(zb)
 Trade Mark Act 1999
 Basic Requirements of Trademark

1) The mark can be presented graphically. (either in paper

form or digital form)

2) Is capable of distinguishing goods or service from others.

Trademark can be visualized in many forms;
1) Letters- BMW, LIC, IBM, LG
2) Numbers
3) Symbol/Logos
4) Shape of Goods
5) Packing
6) Name
7) Slogans
 Types of Trademark
1) Product Mark : Attached to a goods to distinguish its
identity from another.
Example:
2) Service Mark : it distinguishes the service of one owner
from that another. Companies providing services like
education, restaurant, courier, transport ect. are now in a
position to protect their names and marks from being misused
by others.

Examples:
3) Collective Mark: Collective marks are used to inform the
public about a particular characteristics of the product for which
the collective mark is used. The owner of such marks may be an
association or public institution or it may be cooperative.
4) Certification Mark: It is a sign including that the goods/
services are certified by the owner of the sign in terms of
origin, material, quality, accuracy or other characteristics. It
specifies the safety and the quality of the product.
 Duration Of Trade Mark – 10 Years + Renew
 Remedies against infringement:
A) Civil Remedies: 1) Search and seizure order
2) Injunction, Damage order
B) Criminal Remedies: shall be punishable with imprisonment
for a term not less than six month and which may extend to three
years and fine shall not be less than 50000 and which may extend
to 2 Lakhs.
• Trademark and Service mark
 INDIAN PATENT ACT, 1970
 In India the grant of patent is governed by the Patent
Act, 1970.
 The Patent granted under the Act are operative in the
whole of India only.
History
The Patent Law of 1856
The Patent and Design Act, 1911
The Patent Act, 1970
The Patent Amendment Act 1999, 2002, 2004 2005,
2006.
 Patent
 ― A patent is a monopoly right granted to a
person who has invented a new and useful
article or an improvement of an existing
article or a new process of making an article.‖
 Indian Patent Act, 1970

 Object: The object of patent law is to encourage

scientific research, new technology and industrial
progress.
 Basic Requirement for the grant of Patent
A patentable invention must be
1) New Product or process/ Novelty
2) Non-obvious (Not easily discovered, seen )
3) Useful
4) capable of industrial Application.

Novelty: The invention must be new and should not be

already known to the public.

Non- obvious: The invention should not be obvious (easily

seen or understood) to a person skilled in the art and should
represent an innovation.
Industrial Application and Usefulness:
The subject matter of patent must have an industrial application,
either immediate or in the future that is useful to the society or
nation.

Things which are Patentable:

Ideas with Technical aspects or a technical contribution or a
contribution of economic significance.
Under Patent Act, 1970 mere discoveries or ideas are not
patentable, but only those discoveries or ideas, which have a
technical aspect or a technical contribution or a contribution
which has economic significance with original, novel, useful
and inventive way to carry them out for industrial application
are patentable.
 Non Patentable Items
Section 3 and 4 of Indian Patents Act, 1970 lays down that the
following inventions are not patentable:-
1) Inventions relating to atomic energy are not patentable.
(Ex. Uranium, Radium, Lithium ect)
2) Traditional Knowledge
Ex. Turmeric , Neem
3) A presentation of information

4) A mixture of two or more substances, that just cause

aggregation of properties of components.
 Rights of Patentee
1) Monopoly Right to Use, Make and Sell patented
Article: Patents are given exclusive and monopoly right to
use, make, market and sell the patented article. This right
can be exercised directly by patentee or through his
agents. This right can be exercised only during the fixed
term of patent.
2) Right to transfer: A patentee has a right to transfer by
assignment, or through a license to any person to use,
make , manufacture, market or sell the patented article.
3) Right to surrender: A patentee has a right to surrender
his patent to government of India for ant reason.
4) Right to Sue: A patentee has a right to sue any person for
infringement of his right in respect to patent.

Term of Patents:
20 Years from the date of filling of the application for the
patent. + Renewal
 Remedies for infringement:
Suits for infringement of patent rights may be filled in any
court inferior to district court having jurisdiction to try the
suits. The patent owner (Patentee) is entitled to any one or
more of reliefs as the court may deem fit and proper such as
1) Temporary injunction, if the plaintiff will offer an
irreparable loss if injunction is not granted as the patent is
valid and infringed.
2) Damages on accounts of profits at the option of plaintiff.
3) An order that infringed goods, materials and implements
be destroyed without payment of any compensation to the
defendant.

Adv. Dr. Sandip Yadav KJSAC