Company Law

Meaning of company:-

 The word ‘company’ is derived from the Latin word (‘com’ means with or together, and ‘panis’ means
bread’) i.e. association of person who took their meal together.
 Earlier merchant used to discuss the business matters in festive gathering, but nowadays due to
complexity of business it is not possible.
 ‘Company’ denotes joint stock enterprise in which capital is contributed by large number of people.
 It is association of likeminded person which is formed for the purpose of carrying on the
business.
 Company is a corporate body having separate legal entity distinct from its members.
 The word ‘corporation’ is derived from the Latin word ‘corpus’ which means to have a body.
 Corporation is created by the procedure of law, hence it is also called ‘artificial legal person’
 Section 2(20) of the ‘Companies Act, 2013’ company means a company incorporated under this act
or any previous company law.
 Company is a legal person/legal entity having perpetual succession (beyond the life of its
members)
 Section 8 Companies (Nonprofit seeking) are subject to corporate life under the license
requirement.
 Co. Is a legal device for attainment of the social and economic ends, hence it is a combined
political social economic and legal institution.

 Various definitions:- 
 “It is a means of cooperation and conduct of an enterprise”

 “It is an intricate, centralized, economic, administrative structure run by professional

managers who heir capital from the investors”
 Lord Justice James defined as “ An association of many persons who contribute money or
money’s worth in a common joint stock and employ it in some trade or business and who share
the profit and loss there from”
 The common stock so contributed is denoted in money and it is the capital of the company.
 The person to whom its belong is called the members of the company.
 The proportion of capital to which each member is entitled is called the ‘share’.
 Since, Co. is a legal person it has many rights, duties, obligations, powers as prescribed by law.
 It possess only the property which is conferred upon by MOA

 Characteristics of a company (section 10) 

 T – Transferability of shares
 O – Ownership and management are separate from each other.
 P – Perpetual succession
 C – Contractual capacity ( Can sue, can be sued in its own name)
 L- Limited liability
 A – Artificial legal person
 S – Separate legal entity
 S- Separate Property
 Corporate Legal entity:- In Salmon v/s. Salmon and co.ltd it was held that once a company is
 incorporated under ‘Companies Act’ it becomes distinct from its members, and for this
purpose it is immaterial whether any member has a large or small portion of the shares, and
whether he hold those share beneficially or as a mere trustee.
 Salmon v/s. Salmon and co.ltd:
Carried a leather and boot manufacturing business for some years – formed a
limited co. – he,his wife, his daughters, and 4 sons were the only members – Salmon
sold his business to the co. – in part payment the co. issued secured debentures –
Salmon was MD, and his 2 sons were directors – Co. became insolvent – the
unsecured creditors claimed for the entire assets – argued that the co is mere
agent of Salmon, and Salmon being the principle beneficiary was ultimately
responsible.

 Lee v/s Lee air firming ltd:

Lee qualified pilot- held all except one share of the co.- voted himself as MD and
appointed as a chief pilot – he was killed in a air crash working for co – his wife
claimed compensation for death of her husband in course of employment – co.
argued that a person can not be employee as well as employer at the same time –
privy council held Lee and the co. is distinct.

 Calcutta High Court in Kondoli Tea co.ltd recognized the principle of separate
legal entity.

 Limited Liability:
“The privilege for limited liability for business debts is one of the principle advantage of doing
business under the corporate form of organization.”
 In case a company limited by shares: the members are liable only upto the unpaid amount
of the share capital held by them.
 In case co. limited by guarantee: members are liable only upto the amount guaranteed by
them, which is required to be paid at the winding up of the co.
 Case: Buckley J. in Re. London and Globe finance corporation
 There are some statutory exception – members become personally liable if the
membership falls bellow the minimum prescribed limit and the business is carried on
for than six months.

 Perpetual Succession: 
 An incorporated company never dies except wound up as per law.
 The company remains unaffected in case of death or departure of its members.
 The membership of the co. may change however the co. shall maintain its same legal status
unless wound up.
 Member may come and go, company runs forever.

 Separate Property: 
 A co. being a separate entity may hold enjoy and dispose off the properties in its own name.
 No member can claim himself to be the owner of the property during the existence or winding
of the co.

 Transferability of shares: 
 The capital of the co. is divided into parts called ‘share’
 The shares are movable property.
 Unless otherwise provided by the articles they are considered as freely transferable.
  A member can sell his shares and recover his investment. It provides liquidity to the member.
 Stock exchanges provide the facility to buy and sell of securities.
 Nowadays most of the listed co. provide transfer of shares through electronic mode by the
depository participants instead of physical transfer.

 Capacity to sue and be sued in its own name: 

 The co. being a separate legal entity can sue and can be sued in its own name.
 All legal proceeding is to be instituted against the co. in its own name, and similarly the co.
shall file the suit in its own name.
 Co. as a separate legal entity may also sue any of its member if required.
 Contractual Right: 
 Co. can enter into a contract in its own name for the conduct of the business.
 Shareholder can not enforce a contract which has been entered into by the company, as he
is not a party to the contract.(privity to the contract)

 Limitation of Action: 
 A company can not act beyond the charter documents means the MOA and AoA.
 The MOA regulates the power and fixes the objects of the co.
 The actions and the objects are limited within the scope of its memorandum.

 Separate Management: 
 The co has large number of shareholders scattered at various places over the world

 Its not possible for every member to participate in the management
 Management requires various skills, knowledge, experience, expertise.
 Hence member appoint the board of directors, for management.

 Voluntary Association of profits: 

 Termination of existence: 
Can be terminated only by following the due procedure of law for winding up.

 Can citizenship provided to a company? 

 No, citizenship can be enjoyed by the natural persons only as per the ‘Indian Citizenship
Act,1955’ and Constitution of India.

 Can company avails fundamental rights? 

 It depends upon the type of fundamental right, if it is granted to any person then it
can be enjoyed by the co as well.
 But if it is for citizens only then such right can not be claimed by the co.
 Nationality and Residential status of Company:- 
The nationality or residential status depends upon:
 Place of incorporation
 Place of meetings of the governing body
 Concept of corporate personality: 
 Though co is a separate legal entity but it can not act on its own, it is operated through the
natural persons only.

 Lifting of or piercing through the corporate veil: 

 Where a fraudulent or dishonest use is made of the legal entity the individual concerned
will not be allowed to take shelter behind the corporate personality.
 The court will break through the corporate shell and apply the principle of what is known
as “Lifting of or piercing through the corporate veil”
 The court will look behind the corporate entity and take actions as though no entity is
separate from its member and the members shall be held personally liable.
Lifting of co-orporate veil

 Company and other business entities:-

 There exists lots of similarities as well as dissimilarities between the company and other
forms of business, like LLP or partnership etc.

 Distinction between company and partnership firm:- 

Company Partnership
Distinct legal person Not distinct from the several persons who
compose it.
Property belongs to the co. not to the Property of the firm belongs to the
individuals partners.
Creditors can not proceed against the Creditors of the partnership firm, are the
members, they can sue the co. only creditor of individual partners and a
decree issued against firms can be
executed against partners as well jointly
and severally.
Members are not agents. Partners are the agents of the firm
Member can’t. Can dispose of the property and incur
liabilities as long as it is working in the
firm’s name.
A co. can enter into contract with its A partner can not enter into a contract
member. with its firm.
Shares are freely transferable unless A partner can not transfer his shares to
specifically provided by AOA transferee without the consent of other
partners.
Liability limited Liability is unlimited
Audit compulsory Not compulsory for every firm
Can be dissolved by winding up only. Created out of agreement can be dissolved
by agreement.

 Distinction between company and HUF: 

Company HUF
 Consist of heterogeneous members Consists homogeneous members as they
are member of same Hindu undivided
family
There is no suchsystem in accompany . Karta has the sole authority to contract
debt for business
Person becomes member by virtue of Not by virtue of birth
birth
Registration is compulsory Registration is not compulsory.

 Distinction between company and LLP: 

Company LLP
Companies Act, 2013 Limited Liability Partnership Act, 2008
There are different types of companies There is only one type of LLP
such as private limited co, public limited
co, co limited by shares or guarantee,
etc
It is mandatory and registered with It is mandatory and registered with MCA
MCA
Statutory Audit is mandatory Depends on capital and turnover.
Co. can raise fund by issuing shares LLP can not issue shares. It can be only
possible by introducing capital or taking
loan.
Pvt co. minimum 2 member , maximum There must be minimum 2 partners,
200members maximum 50 members.
Public company minimum 7 members,
maximum unlimited members

 Journey of Indian company law:- 

 Various Indian company law is modeled on the English Act.
 Following the Joint Stock companies Act 1844 in England the 1 st companies Act was passed in
India, in 1850
 It provided for the registration of the co. or the transferability of the shares.
 The amending act 1857 provided the right of registration with or without limited liability.
 Subsequently this right was granted to the banking and insurance co. by an act 1860 following
the similar principle in Britain.
 Companies act 1856 replaced all the previous acts. And provided for incorporation, regulation,
and winding up of the co, or other entities.
 The Act was recast as per amendments which were made in accordance with the law in England
upto that time.
 1913 – consolidated act was passed, a major amendments were made to the consolidated act in
1936.
 England passed – comprehensive companies Act 1948
  1951 – indian govt. promulgated the Indian company (amendment) ordinance under which
central govt and the court assumed extensive powers to intervene directly into the affairs of
the co.
 This was replaced by Amending act of 1951.
 The co. Act 1956 was enacted with a view to consolidate and amend earlier laws, it came into
force w.e.f 1.4.1956
 The Co. Act 1956 was based on the recommendation of “ company law committee (Bhaba
committee)
 It is longest piece of legislation ever passed in the parliament.
 The Co.Act 1956 contains 658 sections and 15 schedules.

 Concept paper on company law and JJ IRANI Report 

 A committee was constituted under the chairmanship of JJ.Irani on 2nd December, 2004.
 JJ Irani was then the director of Tata sons.
 The main task of JJ. Irani committee is to review the co. Act, 1956.
 Considering the national and international scenario the committee submitted its report on
31.5.2005.
 This report was considered as a road map for flexible, dynamic and user friendly new company
law.
 Based on the recommendations of JJ Irani committee the Companies Act, 2013 was enacted.
 This committee also recommended the shift from the “government approval regime” to the
“shareholders approval and disclosure regime”
 This committee also recommended that the pvt. Co should also be given flexibilities and
freedom of operations and compliance at a low cost.
 Co with higher public interest should be subjected to stricter governance.
 Govt. co and public financial institution should be subjected to similar parameters with respect
to disclosure and corporate governance.
 “Companies bill 2012” finally became “Companies Act,2013”
 It received the president’s assent on 29.8.13 and notified in the official gazette on
30.8.2013.
 Companies Act,2013 has undergone amendments 4 times so far.
 Companies (Amendment) Act, 2015
 Companies (Amendments Act, 2017
This act was amended in accordance with the “Insolvency Bankruptcy code, 2016 and FinanceAct,2017

 IBC,16 led to various omissions like section 253,269,289,304,323,325.

 Applicability of the Companies Act, 2013 

 Section 1 of the act – The act extends to whole of India including J&K.
 The provisions of the act shall apply to the following:
 Co. incorporated under this act or any previous company law.
 Insurance companies unless contrary to the provisions of “Insurance Act, 1938” or “IRDA
Act, 1999”
 Banking Co. unless contrary to the provisions of “Banking Regulation Act, 1949”
 Co. engaged in the supply of electricity unless contrary to the provisions of “Electricity
Act, 2003”
  Any other co. which is incorporated under any special act unless contrary to the provisions
of that special act.
 Any Body corporate incorporated under any act as the central govt. may notify in this
behalf.
 Co. Act 2013 does not apply to unincorporated company, association of persons consisting large
number of people has been declared as illegal.

 Illegal Association:- (Section 464) 

 Any unregistered association of person/partnership having more than 50 members who are
working for acquisition for gain are considered as illegal association.
 This limit may be increased upto 100 members by central govt.
 Law does not recognize illegal association – Hence can not be wound up by tribunal.
 Penalty fine – may extend upto rs. 1Lakh & members shall be personally liable.
 Exceptions:-
 HUF(single family)
 AOP of professionals which is created under any special act e.g. LLP Act, 2008.
ILLEGAL ASSOCIATION.

 HUF-1 HUF-2
50 + 70 = 120(Partnership) legal.
 HUF-1 HUF-2
Karta-1 + Karta-2 = Partnership 2 – legal.

 HUF-1 HUF-2
50 + 70 (Partnership) – 120 member,
72 minor
48 major ---Legal.

 Types of Companies :
On the basis of incorporation, number of members, size , motive the companies can be classified as
follows:-

 Incorporation of the co.: - 

 Chartered companies
 Registered Companies
 Statutory Companies

 Liability:- 

 Limited by shares/Guarantee
 Unlimited
 Number of members:- 
 OPC
 Private co.
 Public co.
 Size:- 
 Small co.
 Other co.
  Control:- 
 Holding co.
 Subsidiary Co.
 Associate co.
 Besides there also other types of co : 
 Non profit generating co.(Section 8)
 Govt. co
 Investment co.
 Producing co.

 Private Company[ Section 2(68)]:- 

 2 or more person can form a private company subject to a limit of maximum 200 members ,
except in case of one Person Company
 Right to transfer its shares is restricted.

 As per Section 2(68) of the Companies Act, 2013, “private company” means a company having a
minimum 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:
 Provided that where two or more persons hold one or more shares in a company jointly,
theyshall, for the purposes of this clause, be treated as a single member.

Provided further that the following persons shall not be included in the number of members;—

(A) persons who are in the employment of the company; and

(B) persons who, having been formerly in the employment of the company, were members of the
company while in that employment and have continued to be members after the
employmentceased,shall not be included in the number of members; and

(iii) prohibits any invitation to the public to subscribe for any securities of the company;

 Public Co.[ 2(71)]:- 

 By virtue of Section 2(71), a public company means a company which:
(a) is not a private company;
(b) has a minimum paid-up share 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 a public company.
 One person Company[2(62)]:- 
 There is only one member it is formed as a private co.
 Companies with charitable objects[Sec 8]:- 
 Person or AOP registered and licensed under section 8 of the act as a limited co.
 Has in its object the promotion of commerce, arts, science, education and research, charity,
social welfare or any other object.
 Intends to apply its profit or any other income for the promotion of its objects.
 Prohibits to pay dividend to its members.
 Government Co.[2(45)]:- 
 Government company means 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.
 A company which is a subsidiary of a govt. company is also considered as a govt.co.
 Foreign co.[2(42)]:- 
 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.
 Holding Co.[2(46)] 

Holding Company in relation to one or more other companies, means a company of whichsuch companies
are subsidiary companies

*Explanation. —For the purposes of this clause, the expression "company" includes
any body corporate.
 Subsidiary Co.[2(87)]:- 
 Subsidiary Company in relation to any other company (that is to say the holding company),
means a company in which the holding company
1 Controls the composition of the Board of Directors; or
2 Exercises or controls more than one-half of the total Voting Power either at its own
or together with one or more of its subsidiary companies.

EXPLANATION - FOR THE PURPOSES OF THIS CLAUSE

a. A company shall be deemed to be a subsidiary company of the holding company even if the control
referred to in sub-clause (i) or sub-clause (ii) is of another subsidiary company of the holding
company.

b. The composition of a company's Board of Directors shall be deemed to be controlled by another

company if that other company by exercise of some power exercisable by it at its discretion can
appoint or remove all or a majority of the directors

c. The expression "company" includes any Body Corporate

d. "layer" in relation to a holding company means its subsidiary or subsidiaries

 Associate Co[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 For the purposes of this clause, the expression "significant influence" means control
of at least
twenty per cent, of total voting power, or control of or participation in business decisions under
an agreement.
 Small Company[2(85)]:- 
Small company means a company, other than a public company:
a) 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 10 crore rupees; AND
b) Turnover of which as per profit and loss account for the immediately preceding financial
does not exceed two crore rupees or such higher amount as may be prescribed which shall not
be more than 100 crore rupees.
 PROVIDED THAT NOTHING IN THIS CLAUSE SHALL APPLY TO:-
(A) A holding company or a subsidiary company
(B) A company registered under section 8 (non-profit organisation)
(C) A company or body corporate governed by any special Act
 Nidhi Co. [Section 406]:- 
 Company which has been incorporated as a nidhi with the object of cultivating the habit of
thrift (cost cutting)and savings amongst its members, receiving deposits from, and lending
to, its members only, for their mutual benefit
 which complies with such rules as are prescribedby the Central Government for regulation
of such class of companies.
 The primary object of Nidhis is to carry on the business of accepting deposits and lending
money to member- borrowers only against jewels, etc.,and mortgage of property.
 Producer co.:- 
 According to the provisions as prescribed under Section 581A(l) of the Companies Act,
1956, a producer company is a body corporate having objects or activities specified in
Section 581B and which is registered as such under the provisions of the Act. The
membership of producer companies is open to such people who themselves are the primary
producers, which is an activity by which some agricultural produce is produced by such
primary producers.
 Dormant Co.[ section 455]:- 
 Section 455 of the Companies Act 2013 read with Companies (Miscellaneous) Rules, 2014
stipulate the provisions pertaining to “Dormant Company”. Where a company is formed and
registered under this Act for a future projector to hold an asset or intellectual property
and “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.
 For the above purposes, Inactive Company means a company which:
(a) is not carrying on any business or operations; or
(b) has not made any significant accounting transaction during last two financial years,
(c) has not filed financial statements and annual returns during the last two financial
years.

 Formation of a company:- 
 According to companies act 2013, a company may be formed for any lawful purpose by –
 7 or more person if it’s a public co
 2 or more persons if its formed as a pvt. Co.
 1 member if its an OPC
 A co. formed above may be-
 Limited by shares
 Limited by guarantee
 Unlimited co.
 Co. limited by shares – liability of the members are limited by MOA upto the unpaid amount of
share capital held by them
 Co. limited by Guarantee – liability of the members are limited by MOA upto such amount as
the member may respectively undertake to contribute to the assets - winding up
 Unlimited – Co. not having any limit on the liability.
 Incorporation of the Co.:
 Application shall be file with the ROC in form INC 32(SPICe) + prescribed fees + following
 documents:-
 MOA duly signed by all subscriber to MOA
 Declaration from(CA/CS/CMA/Advocate) – engaged in the co. formation- all the
compliances are duly complied with (DIR 8)
 Declaration of directors – He is not convicted of any offence, misfeasance, breach of
duty (DIR 9)
 Address of registered office
 Particulars ( name, family name, residential status, address) of the subscribers.
 Particulars of the interest of the 1st directors in any other co. ,firm, BC etc.
 ROC after considering above – register – issue certificate of Incorporation.
 From the date of issue of COI – ROC shall issue a ‘corporate Identity Number’(CIN)
 CO. shall maintain copy of all the documents as mentioned above - Parmanently.
 If any person furnishes any false or incorrect information or suppresses any material info.
Shall be punishable u/s - 447.
 Share Capital:-
A capital can be considered as mkoney which the co. collects through the issue of the share
capital.
 Share is a share in the share capital in the company and includes stock unless a distinction
beteen stock and share is expressly made.
 Share capital – funds that the co. raises through issuing ownership interest in the co .in
the form of shares.
 Describes the number and type of shares that compose a company’s share structure.
Nominal/Authorize/ Registered capital:-
 Such capital as authorized by MOA as the maximum amt. of share capital of the co.
 Issued Capital:- 
 Capital which the companies issue time to time for subscription.
 It is part of the authorized capital.
 This is computed at face value or nominal value.
 Subscribed Capital:- 
 Part of the issued capital which is subscribed by the members from time to time.
 Entire issued capital may not be subscribed.
 Called up Capital:- 
 Part of the subscribed capital which has been called up for payment.
 Paid up share capital:- 
 Part of the called up capital, which has been paid by the shareholders and duly received by
the co.
 Equity Share Capital:- which is not a part of preference share capital.
 Preference Share capital:- 
 Part of the issued share capital of the co. which carries or would to carry a preferential
right with respect to :-
 Payment of dividend – either fixed amount or calculated at a fixed rate.
 Repayment of the capital amt. in respect of winding up of the company.

CHART
 Board of Directors:- 
 Co. is an artificial legal entity – board of directors manages the day to day affairs of the
co.
 Directors acting collectively known as board – They play a very vital role in the
management of the co.
 Section 149 consist individuals only. No body corporate or AOP can be appointed as a
 director.
 Section 2(10) of the Companies Act, 2013: "Board of Directors or Board, in relation to a
company, means the collective body of the directors of the company.
 Section 2(34) of the Companies Act, 2013: "Director means a director appointed to the
Board of a company".
 Office of Director cannot be assigned.
 Section 149(1) – minimum number of director:
 Public co. – 3
 Private co. – 2
 OPC – 1
 Maximum number of director can not exceed 15
 Pass special resolution – can exceed the no. of directors beyond 15.
 Every company shall have at least 1 director who has stayed in India for a period of not
less than 182 days in the previous Financial Year (April to March).[149(3)]
 The days will be calculated proportionately, in case newly incorporated company.
 Appointment of the Director:- 
 1st Directors:-
 Generally, the first directors of the companies are named in AOA of the Company.
 If the names of the 1st Director are not given in the AOA of a company, then
subscribers to the MOA who are individuals shall be deemed to be the first directors
of the company until the directors are duly appointed.
 In case of OPC, an individual being a member shall be deemed to be its first director
until the director(s) are duly appointed by the member.
 Subsequent Director:-
 Every director shall be appointed by the company in general meeting except otherwise
provided.
 DIN:- 
 Director Identification Number or any other number prescribed by the CG which sgall be
treated as DIN.
 It is compulsory for appointment of director of a company. Every person proposed to be
appointed as a director shall furnish his DIN and a declaration that he is not disqualified
to be appointed as director
 Consent to act as Director:- 
 A person appointed as a director shall on or before the appointment give his consent to
hold the office of director in physical Form DIR-2 i.e. Consent to act as a director of a
company.
 Filing of Form DIR-2 & DIR-12:- 
 The Company has to file Form DIR-12 (particulars of appointment of directors and KMP
along with the Form DIR-2) within 30 days of the appointment of a director.
 CHART
 Retiring by rotation:- 
 Applicability:-
The provisions relating to retire by rotation only applies to the Public Companies.
 Non-Applicability:-
The provisions relating to retire by rotation will not apply to -
1. Private Company

2. Unlisted Government Company

3. Subsidiary of unlisted Government Company

  Rotational Directors are directors who are 'eligible to retire' at an AGM.
 Directors other than Rotational Directors are Non Rotational Director.
 Number:-
Atleast 2/3rd of the 'Total Number of Directors' should be Rotational Director.
Note:
1. The AOA of Public Company can specify higher number of Rotational Directors, or All
directors be Rotational
2. Total Number of Directors means total directors on roll of the board currently.
3. Independent Director shall be excluded while calculating ‘Total Number of Director’
4. Rounded off to next 1.
 Other than rotational director will be non- rotational.
(Maximum l/3rd of the 'Total Number of Directors'will be Non-Rotational Director)
 Removal of the Director:- 
 Special notice given by the member.
 Co. shall forward the notice to the concerned director.
 Co. sent the notice of the general meeting to all the members along with the
representation made by the director.
 If representation received too late it shall be read out at the general meeting.
 Representation received to secure needless publicity, company may apply to NCLT.
 If NCLT satisfied may exempt the co. from sending the representation.
 Convene general meeting – pass ordinary resolution
 Give notice in the news paper one in English, vernacular language.

 Meeting of the board:- 

 1st board meetings within 30 days of the date of incorporation.
 At least 4 board meetings in a year except 1st board meeting.
 One in each quarter of the calendar year (SS1)
 The gap between 2 board meetings shall not exceed 120 days.
 OPC, small co., Dormant co, Private co, Section 8 co:- 1 meeting in each half of the calendar
year.
 The minimum gap should be 90 days.
OPC having one director no need to hold board meeting

 The notice of the board meeting shall be sent 7 clear days before the days of meeting.
 Excluding the date of meeting &
 Date of serving
 Notice shall be given to all the directors at their registered address, either by recognized
speed post or electronic means or any other means.
 Notice sent by post – 48 hrs for serving the notice( i.e. 48hrs+ date of serving+ date of
meeting to be excluded while counting the 7 clear days.)
 Adjourned meetings:- 7 clear days’ notice if the meeting is not at the same time,day, place
next week.
 Notice of adjourned meeting shall be sent to all the directors including who did not
attended the original meeting.
 Quorum: 1/3rd or 2 whichever is higher.
 Meeting of the Shareholders:-

General meetings:- 

 Annual General meeting[section 96]:-

 IN AGM we can transact both ordinary as well as special business.
  Ordinary business-
 Adoption of annual accounts, report, consolidated financial statements
 Declaration of Dividend
 Appointment of Directors
 Appointment of Statutory Auditor. [ADDA]
 1 AGM:-
st

 Within 9 months from the closing of each financial year.(closing of financial year
means- if the co. is incorporated from 1st April to 31st December then closing of
that financial year & if it is incorporated from 1st January to 31st march then closing
of just next Financial year.)
 No extension in the maximum term.
 Subsequent AGM:-
 Within 6 months from the date of closing of Financial year.
 And, maximum gap between two meetings shall not exceed 15 months.
 Special extension can be granted for a period of 3 months (ROC)
 Can be taken at any day except national holiday or any other day specified by central govt.
 The meeting should be started within business hours(9-6)
 Place:-

 At the Registered office or any other place with in the same city, town, village where the
RO is situated
 In case of govt. co any place approved by the Central govt.
 Unlisted co.: Any place in India, after obtaining consent from its members.
 Default in holding AGM:
 Impracticable hold meeting, any member may apply to NCLT
 NCLT shall direct to call, held, and convene the meeting.
 Direction includes any member in person or in proxy may hold the meeting.
 EGM[sec 100]:-
 Other than AGM
 Called to transact other business.
 Notice of general meeting:- at least 21 clear days
 Notice shall be given to all the members, auditors, directors.

 Corporate Social Responsibility(CSR) [section 135]:- 

  In case of public co. section 149(6) not applicable shall have 3 director in CSR committee.
 The CSR Committee is required to be constituted if a Company fulfills any of the following
criteria during the immediately preceding financial year:-
Net worth of Rs.500 Crore or more or
■ Turnover of Rs. 1,000 Crore or more or
■ Net profit of Rs.5 Crore or more during any financial year.
 According to the CSR Rules, the CSR provision will also be applicable to every company
including its holding or
 subsidiary, and a foreign company having its branch office or project office in India.
 Cessation of applicability of provision
 If a company does not satisfy the specified criteria for a consecutive period of three
financial years is not required to comply with the CSR obligations.
 Composition of CSR Committee:- 
 For Listed Company: The CSR committee shall consist of 3 or more directors, out of
which one director shall be an independent director.
 Private Company: In case of an unlisted public company or a private company which is
not required to appoint an independent director shall have its CSR Committee without
the independent director with 2 or more directors.

Example: A private company having only two directors on its Board shall constitute its CSR Committee
with two such directors.

 For Foreign Company: With respect of foreign company, the CSR Committee shall comprise of
at least two persons out of which one person resident in India and another person may be from
foreign country duly nominated by the foreign company.

 The Committee shall formulate a CSR Policy and recommend to the Board which shall indicate
the activities to be undertaken by the company in future.
 The Committee shall recommend the amount of expenditure to be incurred on the activities.
Further, the CSR Committee is under an obligation to monitor the implementation of the CSR
policy from time to time.
 In case the unspent amount does not relate to any ongoing project, unspent amount to be
transferred to schedule VII within a period of six months of the expiry of the financial year.
  CSR activities can be done by – 
1. Section 8 co/trust/society incorporated under by the co.
2. Section 8 co/trust/society established by the Central govt. or state govt. or any other
statutory act.
3. Other Section 8 co/trust/society having at least 3 years of experiences
 Social welfare work
 Education
 Gender equality
 Environment protection
 Protection of national heritages
 Contribution to PM relief fund
 PM care fund
 Diseases
 Disaster management
 Activities in which the expenditure can not be made:- 
 Outside india
 Benefit provided to the employees and their family
 Political contribution
 Sponsorship to marathon ,award
 Expenditure to fulfil the statutory provisions of law.
 Expenditure in normal course of business.

 Business Ethics:- 
 Application of ethics in business. The application of ethical ideas to the business behavour.
 Promotes good to society, improves profitability and sustainability.
 To know what is right and what is wrong the work place, and doing what is right.
 Concerned with the behavior of a businessman doing business.
 Business ethics are developed over a passage of time and custom. Custom differs from one
business to another.
 Social responsibility is to implement business ethics.
 Custom adopted by business – accepted by public such custom will become an ethics.
 Art and science for maintain a harmonious relationship with the society.
 Business ethics are principle, practice and philosophy that guide the business people in day to
day business operation.
 They are concerned primarily with the impacts of the decisions within and outside the
business organization.

 Ethical Dilemma:- 
 It is a choice that are seem to be equally unfavorable or mutually exclusive.
 Involves a choice between two or more equally acceptable/unacceptable situations.
 When one choice prevent the other.
 A dilemma could be a right v/s. wrong, when the right is more difficult to pursue.
 It is a dilemma that is not easy to resolve.
 Ethical dilemma is consideration that takes us into the grey zone of the business or
professional life where things are no longer black or white.
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