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THE COMPANIES ACT 2013

THE COMPANIES ACT 2013. Company ????. an artificial person created by law. + a group of persons associated together for the attainment of a common end, social or economic. According to Section 2, Clause 20 of the Companies Act, 2013 defines a company as

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THE COMPANIES ACT 2013

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  1. THE COMPANIES ACT 2013

  2. Company ????

  3. an artificial person created by law. + a group of persons associated together for the attainment of a common end, social or economic.

  4. According to Section 2, Clause 20 of the Companies Act, 2013 defines a company as “a company incorporated under this act (Companies Act,2013) or under any previous company law”.

  5. ‘Existing Company’ means a company formed and registered under any of the earlier Company Laws.

  6. Definition : Company Lindley, “ an association of many persons who contribute money or money’s worth to a common stock, and employ it in some common trade or business, and who share the profit or loss arising there from.”

  7. Company :Characteristics • Separate legal entity • Limited liability • Perpetual succession • Common seal • Transferability of shares • Separate property • Capacity to Sue

  8. 1. SEPARATE LEGAL ENTITY • an entity separate from its members. • an independent corporate existence. • members cannot be held liable for the acts of the company. • company’s money and property belongs to it and not to the shareholders CASE : Salomon v. Salomon & Co.Ltd. • Business sold for £ 30,000 • Assets £ 6,000 • Liabilites£ 17,000 • Debentures £ 10,000 • Unsecured creditors£ 7,000

  9. 2. LIMITED LIABILITY- A company may be: - a company limited by shares or -a company limited by guarantee.

  10. 3. PERPETUAL SUCCESSION- • Being an artificial person a company never dies, • nor does its life depend on the life of its members.

  11. 4. COMMON SEAL- • The common seal acts as the official signature of the company.

  12. 5. TRANSFERABILITY OF SHARES 6. SEPARATE PROPERTY 7. CAPACITY TO SUE

  13. Lifting/Piercing the Corporate Veil Veil and not a wall b/w the company and its members (featuring corporate personality) - Courts crack the shell of personality and look into the beneficiaries.

  14. Exceptions : Cases in which corporate veil has been lifted are: • Protection of revenue. (tax evasion e.g creation of inactive companies) 2. Prevention of fraud or improper conduct. (fraudulent purpose e.g company created to transfer land) 3. Determination of character of a company whether it is enemy. Case : DiamlerCo.Ltd. V. Continental Tyre & Rubber Co.Ltd.

  15. 4. Where the company is a sham. (e.g. Employee forms a company to compete with his previous employer) 5. Company avoiding legal obligations. 6. Company acting as agent or trustee of the shareholders. 7. Avoidance of welfare legislation. 8. Protecting Public Policy.

  16. Statutory Exceptions : • Number of members below statutory minimum. 2. Failure to refund application money. (within 130 Days) 3. Misdescription of company’s name. 4. Fraudulent Trading. 5. Holding and Subsidiary companies.

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