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Notes on company law
Corporate Law (BLAW 2001)
Savitribai Phule Pune University
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2015 CA Final
Notes on Company Law
Points to Remember
- All amendments corresponding with companies act 2013 are compiled in this summary
- Many sections of new companies act 2013 is not notified by MCA ( ministry of corporate affairs) so that sections are of old companies act 1956
- Where ever as per companies act written that means old companies act 1956
- For new companies act specifically mentioned .. act 2013
- All judgements of courts are compiled in this summary
- All those older judgments based on old companies act 1956 which contradicts the new companies act 2013 .. not taken into consideration
- Comparative study of old companies act 1956 and new companies act 2013 is given Concept
Question1) Explain the Advantages and Disadvantages of
Incorporation of a Company. (L)?
Introduction
A company, in common parlance, means a group of persons associated together for the attainment of a common end, social or economic. It has “no strictly technical or legal meaning.”
According to sec. 3 (1) (ii) of the Companies Act, 1956 a company means a company formed and registered under the Companies Act, 1956 or any of the preceding Acts. Thus, a Company comes into existence only by registration under the Act, which can be termed as incorporation.
Acording to sec 2(20) of companies act 2013 , Dzcompanydz means a company incorporated under this Act or under any previous company law;
Advantages of incorporation
Incorporation offers certain advantages to a company as compared with all other kinds of business organizations. They are
- Independent corporate existence- the outstanding feature of a company is its independent corporate existence. By registration under the Companies Act, a company becomes vested with corporate personality, which is independent of, and distinct from its members. A company is a legal person. The decision of the House of Lords in Salomon v. Salomon & Co. Ltd. (1897 AC 22) is an authority on this principle:
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One S incorporated a company to take over his personal business of manufacturing shoes and boots. The seven subscribers to the memorandum were all his family members, each taking only one share. The Board of Directors composed of S as managing director and his four sons. The business was transferred to the company at 40,000 pounds. S took 20,000 shares of 1 pound each n debentures worth 10, pounds. Within a year the company came to be wound up and the state if affairs was like this: Assets- 6,000 pounds; Liabilities- Debenture creditors-10,000 pounds, Unsecured creditors- 7,000 pounds.
It was argued on behalf of the unsecured creditors that, though the co was incorporated, it never had an independent existence. It was S himself trading under another name, but the House of Lords held Salomon & Co. Ltd. must be regarded as a separate person from S.
Limited liability- limitation of liability is another major advantage of incorporation. The company, being a separate entity, leading its own business life, the members are not liable for its debts. The liability of members is limited by shares; each member is bound to pay the nominal value of shares held by them and his liability ends there.
Perpetual succession- An incorporated company never dies. Members may come and go, but the company will go on forever. During the war all the members of a private company, while in general meeting, were killed by a bomb. But the company survived, not even a hydrogen bomb could have destroyed it (K/9 Meat Supplies (Guildford) Ltd., Re, 1966 (3) All E. 320).
Common seal- Since a company has no physical existence, it must act through its agents and all such contracts entered into by such agents must be under the seal of the company. The common seal acts as the official seal of the company.
Transferable shares- when joint stock companies were established the great object was that the shares should be capable of being easily transferred. Sec 82 (as per companies act 2013 section is 44)gives expression to this principle by providing that “the shares or other interest of any member shall be movable property, transferable in the manner provided by the articles of the company.”
Separate property- The property of an incorporated company is vested in the corporate body. The company is capable of holding and enjoying property in its own name. No members, not even all the members, can claim ownership of any asset of company’s assets.
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2)for section 147 new section is 12 i. Registered office of company---sub section ( 8 ) If any default is made in complying with the requirements of this section, the company and every officer who is in default shall be liable to a penalty of one thousand rupees for every day during which the default continues but not exceeding one lakh rupees.
3)for section 542 . section is 339 ... for Fraudulent conduct of business— sub section ( 1 ) If in the course of the winding up of a company, it appears that any business of the company has been carried on with intent to defraud creditors of the company or any other persons or for any fraudulent purpose, the Tribunal, on the application of the Official Liquidator, or the Company Liquidator or any creditor or contributory of the company, may, if it thinks it proper so to do, declare that any person, who is or has been a director, manager , or officer of the company or any persons who were knowingly parties to the carrying on of the business in the manner aforesaid shall be personally responsible, without any limitation of liability, for all or any of the debts or other liabilities of the company as the Tribunal may direct: Provided that on the hearing of an application under this sub-section, the Official Liquidator or the Company Liquidator, as the case may be, may himself give evidence or call witnesses. ( 2 ) Where the Tribunal makes any such declaration, it may give such further directions as it thinks proper for the purpose of giving effect to that declaration and, in particular,— (a) make provision for making the liability of any such person under the declaration a charge on any debt or obligation due from the company to him, or on any mortgage or charge or any interest in any mortgage or charge on any assets of the company held by or vested in him, or any person on his behalf, or any person claiming as assignee from or through the person liable or any person acting on his behalf; (b) make such further order as may be necessary for the purpose of enforcing any charge imposed under this sub- section.
Formality and expense- Incorporation is a very expensive affair. It requires a number of formalities to be complied with both as to the formation and administration of affairs.
Company not a citizen- In State Trading Corporation of India v. CTO, the SC held that a company though a legal person is not a citizen neither under the provisions of the Constitution nor under the Citizenship Act.
Q2)Distinction between Company and Partnership.(M)?
Ans-- The principal points of distinction between a company and a partnership are:
Legal status- A company is a distinct legal person. A partnership firm is not distinct from the several members who compose it.
Property- In partnership, the property of the firm is the property of the members comprising it. In a company, it belongs to the company and not to the members comprising it.
Mode of creation- A company comes into existence after registration under the Companies Act, 1956, while registration is not compulsory in case of a partnership firm.
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Agents- Partners are the agents of the firm, but members of a firm are not its agents.
Contracts- A partner cannot contract with his firm, whereas a member of a company can.
Transferability of shares- A partner cannot transfer his share and make the transferee a member of the firm without the consent of other partners whereas a company’s share can easily be transferred unless the Articles provide otherwise and the transferee becomes a member of the firm.
Liability- A partner’s share is always unlimited whereas that of a shareholder may be limited either by shares or a guarantee.(although limited liability partnership act is passed where in partnership concern is also limited)
Perpetual succession- The death or insolvency of a shareholder or all of them does not affect the life of the company, whereas the death or insolvency of a partner dissolves the firm, unless otherwise provided.
Audit- A company is legally required to have its accounts audited annually by a chartered accountant, whereas the accounts of the partnership are audited at the discretion of its members.(but firms have to conduct tax audit if turnover exceeds 1 crore)
Number of members- The minimum number of partners in a firm is 2 and maximum is 20 in any business and 10 in banking business. In case of a private company the minimum number of members are 2 and maximum is 50. In case of a public company the min num of members are 7 and no max limit.(Now even one person can form company as per companies act 2013 )sec2 subsection ( 62 ) DzOne Person Companydz means a company which has only one person as a member;
Dissolution- a company can only be dissolved as laid down by law. A partnership firm can be dissolved at any time by an agreement.
Q3) When can Corporate Veil of a Company be Lifted?(L)
Ans-- For all purposes of law a company is regarded as a separate entity from its shareholders. But sometimes it is sometimes necessary to look at the persons behind the corporate veil. The separate entity of the company is disregarded and the schemes and intentions of the persons behind are exposed to full view which is known as lifting or piercing the corporate veil. This is usually done in the following cases
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In Re R.G Ltd., an American company produced film in India technically in the name of a British company, 90% of whose share was held by the President of the American company. Board of Trade refused to register the film as the English company acted merely as the agent of the American company.
To avoid welfare legislation- where it was found that the sole purpose of formation of new company was to use it as a device to reduce the amount to be paid by way of bonus to workmen, the SC pierced its corporate veil. –The Workmen Employed in Associated Rubber Industries Ltd. v. The Associated Rubber Industries Ltd, Bhavnagar.
Under statutory provisions- The Act sometimes imposes personal liability on persons behind the veil in some instances like, where business is carried on beyond six months after the knowledge that the membership of company has gone below statutory minimum(sec 45)- Madanlal v. Himatlal, when contract is made by misdescribing the name of the company(sec 147), when business is carried on only to defraud creditors(sec 542).
Under New companies Act 2013--- Statutory provisions are—
1)for section 45 no new section is notified
2)for section 147 new section is 12 i. Registered office of company---sub section ( 8 ) If any default is made in complying with the requirements of this section, the company and every officer who is in default shall be liable to a penalty of one thousand rupees for every day during which the default continues but not exceeding one lakh rupees.
3)for section 542 . section is 339 ... for Fraudulent conduct of business— sub section ( 1 ) If in the course of the winding up of a company, it appears that any business of the company has been carried on with intent to defraud creditors of the company or any other persons or for any fraudulent purpose, the Tribunal, on the application of the Official Liquidator, or the Company Liquidator or any creditor or contributory of the company, may, if it thinks it proper so to do, declare that any person, who is or has been a director, manager, or officer of the company or any persons who were knowingly parties to the carrying on of the business in the manner aforesaid shall be personally responsible, without any limitation of liability, for all or any of the debts or other liabilities of the company as the Tribunal may direct: Provided that on the hearing of an application under this sub-section, the Official Liquidator or the Company Liquidator, as the case may be, may himself give evidence or call witnesses. ( 2 ) Where the Tribunal makes any such declaration, it may give such further directions as it thinks proper for the purpose of giving effect to that declaration and, in particular,— (a) make provision for making the liability of any such person under the declaration a charge on any debt or obligation due from the company to him, or on any mortgage or charge or any interest in any mortgage or charge on any assets of the company held by or vested in him, or any person on his behalf, or any person claiming as assignee from or through the person liable or any person acting on his behalf; (b) make such further order as may be necessary for the purpose of enforcing any charge imposed under this sub- section.
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Q4) Write a Note on Pre-incorporation Contracts.(M)?
Ans-- Sometimes contracts are made on behalf of a company even before it is duly incorporated. These are called as pre-incorporation contracts. Two consenting parties are necessary to a contract, whereas a company before incorporation is a non-entity. Therefore, following are the effects of pre-incorporation contracts.
Company cannot be sued on pre-incorporation contracts- A company, when it comes into existence, cannot be sued on pre-incorporation contracts. In English and Colonial Produce Co, Re, a solicitor on the request of promoters prepared a company’s documents and spent time and money in getting it registered. But the company was not held to be bound to pay for those services and expenses.
Company cannot sue on pre-incorporation contracts- A company cannot by adoption or ratification obtain the benefit of a contract made on its behalf before the company came into existence. In Natal Land and Colonization Co v. Pauline Colliery Syndicate, the promoters of a proposed company obtained an agreement from a landlord that he would grant lease of coal mining rights to the company. The company could not, after incorporation, enforce this contract.
Agents may incur personal liability- The agents who contract for a proposed company may sometimes incur personal liability. In Kelner v. Baxter, the promoters of a projected hotel company purchased wine from the plaintiff on behalf of the company. The company came into being but, before paying the price went into liquidation. They were held personally liable to the plaintiff.
Ratification of a pre-incorporation contract
So far as the company is concerned it is neither bound by nor can have the benefit of a pre-incorporation contract. But this is subject to the provisions of the Specific Relief Act, 1963.
Section 15 of the Act provides that where the promoters of a company have made a contract before its incorporation for the purposes of the company, and if the contract is warranted by the terms of incorporation, the company may adopt and enforce it. In Vali Pattabhirama Rao v. Ramanuja Ginning and Rice Factory, a promoter of a company acquired a leasehold interest for it. He held it for sometime for a partnership
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Ans-- Sec 33 of the Companies Act(section 7 of Companies act 2013) deals with registration of a company. To obtain registration an application has to be filed to the Registrar of Companies. The application must be accompanied by the following documents:
Memorandum of Association.
Articles of Association, if necessary.
A copy of the agreement, if any, which the company proposes to enter into with any individual for his appointment as the managing or the whole-time director or the manager.
A declaration that all the requirements of the Act have been complied with.
Articles are compulsory only for unlimited companies, companies limited by guarantee and private companies limited by shares(s 26). The declaration must be signed by an advocate of the SC, or of a HC, or an attorney or a pleader entitled to appear before a HC, or any proposed director, manager or secretary of the company or by a secretary or chartered accountant who is in whole time practice in India[s 33(2)].
Under section 7 of companies act ----- Incorporation of company ( 1 ) There shall be filed with the Registrar within whose jurisdiction the registered office of a company is proposed to be situated, the following documents and information for registration, namely:— (a) the memorandum and articles of the company duly signed by all the subscribers to the memorandum in such manner as may be prescribed; (b) a declaration in the prescribed form by an advocate, a chartered accountant, cost accountant or company secretary in practice, who is engaged in the formation of the company, and by a person named in the articles as a director, manager or secretary of the company, that all the requirements of this Act and the rules made thereunder in respect of registration and matters precedent or incidental thereto have been complied with; (c) an affidavit from each of the subscribers to the memorandum and from persons named as the first directors, if any, in the articles that he is not convicted of any offence in connection with the promotion, formation or management of any company, or that he has not been found guilty of any fraud or misfeasance or of any breach of duty to any company under this Act or any previous company law during the preceding five years and that all the documents filed with the Registrar for registration of the company contain information that is correct and complete and true to the best of his knowledge and belief; (d) the address for correspondence till its registered office is established; (e) the particulars of name, including surname or family name, residential address, nationality and such other particulars of every subscriber to the memorandum along with proof of identity, as may be prescribed, and in the case of a subscriber being a body corporate, such particulars as may be prescribed; (f) the particulars of the persons mentioned in the articles as the first directors of the company, their names, including surnames or family names, the Director Identification Number, residential address, nationality and such other particulars including proof of identity as may be prescribed; and (g) the particulars of the interests of the persons mentioned in the articles as the first directors of the company in other firms or bodies corporate along with their consent to act as directors of the company in such form and manner as may be prescribed. ( 2 ) The Registrar on the basis of documents and information filed under sub-section ( 1 ) shall register all the documents and information referred to in that subsection in the register and issue a certificate of incorporation in the prescribed form to the effect that the proposed company is incorporated under this Act.
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( 3 ) On and from the date mentioned in the certificate of incorporation issued under sub-section ( 2 ), the Registrar shall allot to the company a corporate identity number, which shall be a distinct identity for the company and which shall also be included in the certificate. ( 4 ) The company shall maintain and preserve at its registered office copies of all documents and information as originally filed under sub-section ( 1 ) till its dissolution under this Act. ( 5 ) If any person furnishes any false or incorrect particulars of any information or suppresses any material information, of which he is aware in any of the documents filed with the Registrar in relation to the registration of a company, he shall be liable for action under section 447. ( 6 ) Without prejudice to the provisions of sub-section ( 5 ) where, at any time after the incorporation of a company, it is proved that the company has been got incorporated by furnishing any false or incorrect information or representation or by suppressing any material fact or information in any of the documents or declaration filed or made for incorporating such company, or by any fraudulent action, the promoters, the persons named as the first directors of the company and the persons making declaration under clause (b) of subsection ( 1 ) shall each be liable for action under section 447. ( 7 ) Without prejudice to the provisions of sub-section ( 6 ), where a company has been got incorporated by furnishing any false or incorrect information or representation or by suppressing any material fact or information in any of the documents or declaration filed or made for incorporating such company or by any fraudulent action, the Tribunal may, on an application made to it, on being satisfied that the situation so warrants,— (a) pass such orders, as it may think fit, for regulation of the management of the company including changes, if any, in its memorandum and articles, in public interest or in the interest of the company and its members and creditors; or (b) direct that liability of the members shall be unlimited; or (c) direct removal of the name of the company from the register of companies; or (d) pass an order for the winding up of the company; or (e) pass such other orders as it may deem fit: Provided that before making any order under this sub-section,— (i) the company shall be given a reasonable opportunity of being heard in the matter; and (ii) the Tribunal shall take into consideration the transactions entered into by the company, including the obligations, if any, contracted or payment of any liability.
Section 12(now section 3 of companies act 2013), which states the mode of forming an incorporated company, enables any seven persons (two for private company) to associate for any lawful purpose and to get themselves incorporated into a company with or without limited liability. They can do so by subscribing their names to a memorandum of association and by complying with other documents.
If the Registrar finds the documents to be satisfactory, he registers them and enters the name of the company in the Register of Companies and issues a certificate called the Certificate of Incorporation. Certificate of Incorporation brings the company into existence as a legal person. It is the conclusive evidence that all the requirements under the Act in respect of registration and matters precedent and incidental thereto have been complied with and that the association is a company authorized to be registered and duly registered under the Act.
Section 3 of companies act 2013-- Formation of company--- ( 1 ) A company may be formed for any lawful purpose by— (a) seven or more persons, where the company to be formed is to be a public company; (b) two or more persons, where the company to be formed is to be a private company; or (c) one person, where the company to be formed is to be One Person Company that is to say, a private company, by subscribing their names or his name to a memorandum and complying with the requirements of this Act in respect of registration:
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persons, as may, from time to time, become members of the company, shall be a body corporate by the name contained in the memorandum, capable of exercising all the functions of an incorporated company under this Act and having perpetual succession and a common seal with power to acquire, hold and dispose of property, both movable and immovable, tangible and intangible, to contract and to sue and be sued, by the said name. And section 35 of old act is omitted in new act. So same is to be written
Q9)Explain the Clauses of Memorandum of Association OR Explain
the Importance of Memorandum of Association.(L)?
Ans--- Introduction
One of the essentials for the registration of a company is memorandum of association (sec 33)(now section 7 of companies act 2013)(refer page 10 and 11 of notes). It is the first step in the formation of a company. Its importance lies in the fact that it contains the fundamental clauses which have often been described as the conditions of the company’s incorporation.
Memorandum of association is divided into 5 clauses:
Name clause
Registered office clause
Objects clause
Liability clause and
Capital clause
Name clause---The first clause states the name of the proposed company. The name of a corporation is the symbol of its personal existence. The name should not be, in the opinion of the Central Government, undesirable. Generally it is so when it is identical with or too nearly resembles the name of another company. If the company is with “limited liability” the last word of the name should be “limited” and in case of a private company “private limited”. The Central Govt. may permit a company to drop the word limited from its name, if
a) If the company is formed for the promotion of arts, commerce, religion, science, charity or any other useful object.
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b) The company is to apply its income in promoting its objects and prohibits the payment of dividend to its members.
The name of a company must be painted outside of every place where the company carries on business and printed on every business document and official letter of the company. Misdescription entails personal liability(s147).(now section 12 of companies act 2013 )
Registered office clause---The second clause of the memorandum must specify the State in which the registered office of the company shall be situate (sec 146)(now setion 12 of companies act). Within 30 days of incorporation or commencement of business, whichever is earlier, the exact place where the registered office is to be located must be decided and sent to the Registrar for recording of the same.
Objects clause
The third clause states the objects of the proposed company. The objects clause s divided into two sub-clauses (sec 13)(now section 4 of companies act 2013):
a) Main objects clause: states the main objects to be pursued by the company and the objects incidental or ancillary to the main objects.
b) Other objects: states any other objects which are not included in the main objects clause.
The essence of this clause is that the investors must be informed of the objects of the company in which their money is going to be employed and the creditors must feel protected when they know the assets are being used for the authorized objects.
Section 4 of companies act 2013--- Memorandum -- ( 1 ) The memorandum of a company shall state— (a) the name of the company with the last word “Limited” in the case of a public limited company, or the last words “Private Limited” in the case of a private limited company: Provided that nothing in this clause shall apply to a company registered under section 8; (b) the State in which the registered office of the company is to be situated; (c) the objects for which the company is proposed to be incorporated and any matter considered necessary in furtherance thereof; (d) the liability of members of the company, whether limited or unlimited, and also state,— (i) in the case of a company limited by shares, that liability of its members is limited to the amount unpaid, if any, on the shares held by them; and (ii) in the case of a company limited by guarantee, the amount up to which each member undertakes to contribute— (A) to the assets of the company in the event of its being wound-up while he is a member or within one year after he ceases to be a member, for payment of the debts and liabilities of the company or of such debts and liabilities as may have been contracted before he ceases to be a member, as the case may be; and
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After the Companies (Amendment) Act, 2000, the minimum paid up capital of a public company must be five lakh rupees or more and one lakh or more for a private company.
Q10)Explain the Procedure for Alteration of Memorandum of
Association.(M)?
Ans-- Alteration of name (sec 21)(refer sec 4 of companies act 2013)
A company may change its name at any time by passing a special resolution and with the prior approval of the Central Government. Where a company has been registered with a name which is undesirable, the same may be changed by an ordinary resolution and with the prior approval of the Central Government. In such a case the central government may also within 12 months of registration direct the company to rectify its name and the company must change the name within 3 months from the date of direction unless the time is extended. The new name would also require the prior approval of the Central Govt. The British Diabetic Society was compelled to change its name to something that would not impinge the goodwill of the British Diabetic Association (British Diabetic Association v. The Diabetic Society).
When a company changes its name, the Registrar of Companies has to enter the new name in the register and a new certificate of incorporation must be issued with necessary alterations.
However, it should be noted that no approval will be required if the change consists merely addition or deletion of the word “private” consequent on the conversion of a public company into a private company or vice versa.
Effect of such change: The old name of the company will stand abolished and the new name will come into existence from the date of passing such resolution. However, it does not affect the rights and obligations of the company (sec 23).
Alteration of registered office clause (sec 17)
Shifting of registered office from one State to another is a complicated affair. For this purpose, sec 17 requires
a) A special resolution of the company.
b) The sanction of the Company Law Board.
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The Board can confirm the alteration only if the shifting of the registered office from one state to another is necessary for any purposes detailed in sec 17(1).
Alteration of objects (sec 17)--A company may alter its objects with the passing of a special resolution. The confirmation of the Company Law Board is not required for this purpose. An alteration of the objects is allowed only for the purposes mentioned in sec 17(1).
Registration of alteration (sec 18)-- In case of alteration of objects, a copy of the resolution should be filed with the Registrar of Companies within one month from the date of resolution. In the case of inter-state shifting of the registered office a certified copy of the Board’s order and a printed copy of the altered memorandum must be filed with the Registrar within three months of the Board’s order. Within one month the Registrar will certify the registration. Alteration takes effect when it is so registered.
As per companies act 2013---
Alteration of memorandum.(section 13)--- ( 1 ) Save as provided in section 61, a company may, by a
special resolution and after complying with the procedure specified in this section, alter the provisions of its
memorandum.
( 2 ) Any change in the name of a company shall be subject to the provisions of subsections ( 2 ) and ( 3 ) of section 4
and shall not have effect except with the approval of the Central Government in writing:
Provided that no such approval shall be necessary where the only change in the name of the company is the deletion therefrom, or addition thereto, of the word “Private”, consequent on the conversion of any one class of companies to another class in accordance with the provisions of this Act. ( 3 ) When any change in the name of a company is made under sub-section ( 2 ), the Registrar shall enter the new name in the register of companies in place of the old name and issue a fresh certificate of incorporation with the new name and the change in the name shall be complete and effective only on the issue of such a certificate. ( 4 ) The alteration of the memorandum relating to the place of the registered office from one State to another shall not have any effect unless it is approved by the Central Government on an application in such form and manner as may be prescribed. ( 5 ) The Central Government shall dispose of the application under sub-section ( 4 ) within a period of sixty days and before passing its order may satisfy itself that the alteration has the consent of the creditors, debenture-holders and other persons concerned with the company or that the sufficient provision has been made by the company either for the due discharge of all its debts and obligations or that adequate security has been provided for such discharge. ( 6 ) Save as provided in section 64, a company shall, in relation to any alteration of its memorandum, file with the Registrar— (a) the special resolution passed by the company under sub-section ( 1 ); (b) the approval of the Central Government under sub-section ( 2 ), if the alteration involves any change in the name of the company. ( 7 ) Where an alteration of the memorandum results in the transfer of the registered office of a company from one State to another, a certified copy of the order of the Central Government approving the alteration shall be filed by the company with the Registrar of each of the States within such time and in such manner as may be prescribed, who
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Unlimited companies;
Companies limited by guarantee;
Private companies limited by shares.
This document contains rules, regulations and bye-laws for the general administration of the company. Schedule I of the Act sets out tables of model forms of articles for different companies.
Contents--A of A may prescribe such regulations for the company as the subscribers to the memorandum deem expedient. The Act gives the subscribers a free hand. Any stipulations as to the relation between the company and its members or members inter se may be inserted in the articles. But everything stated therein is subject to the Companies Act. Usually, articles contain provisions relating to the following matters:
Share capital, rights of shareholders, share certificates, payment of commission.
Lien on shares.
Call on shares.
Transfer of shares.
Transmission of shares.
Forfeiture of shares.
Conversion of shares into stock.
Share warrants.
Alteration of capital.
General meetings and proceedings there at.
Voting rights of members, voting and poll, proxies.
Directors, their appointment, remuneration, qualifications, powers and proceedings of Board of Directors.
Manager.
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Secretary.
Dividends and reserves.
Accounts, audit and borrowing power.
Capitalization of profits.
Winding up.
Under companies act 2013 --Section 5 – Articles—sub section ( 1 ) The articles of a company shall contain the regulations for management of the company. ( 2 ) The articles shall also contain such matters, as may be prescribed: Provided that nothing prescribed in this sub-section shall be deemed to prevent a company from including such additional matters in its articles as may be considered necessary for its management. ( 3 ) The articles may contain provisions for entrenchment to the effect that specified provisions of the articles may be altered only if conditions or procedures as that are more restrictive than those applicable in the case of a special resolution, are met or complied with. ( 4 ) The provisions for entrenchment referred to in sub-section ( 3 ) shall only be made either on formation of a company, or by an amendment in the articles agreed to by all the members of the company in the case of a private company and by a special resolution in the case of a public company. ( 5 ) Where the articles contain provisions for entrenchment, whether made on formation or by amendment, the company shall give notice to the Registrar of such provisions in such form and manner as may be prescribed. ( 6 ) The articles of a company shall be in respective forms specified in Tables, F, G, H, I and J in Schedule I as may be applicable to such company ( 7 ) A company may adopt all or any of the regulations contained in the model articles applicable to such company. ( 8 ) In case of any company, which is registered after the commencement of this Act, in so far as the registered articles of such company do not exclude or modify the regulations contained in the model articles applicable to such company, those regulations shall, so far as applicable, be the regulations of that company in the same manner and to the extent as if they were contained in the duly registered articles of the company. ( 9 ) Nothing in this section shall apply to the articles of a company registered under any previous company law unless amended under this Act. Act to override memorandum, articles, etc. (section 6)-- Save as otherwise expressly provided in this Act— (a) the provisions of this Act shall have effect notwithstanding anything to the contrary contained in the memorandum or articles of a company, or in any agreement executed by it, or in any resolution passed by the company in general meeting or by its Board of Directors, whether the same be registered, executed or passed, as the case may be, before or after the commencement of this Act; and (b) any provision contained in the memorandum, articles, agreement or resolution shall, to the extent to which it is repugnant to the provisions of this Act, become or be void, as the case may be. Importance of Articles of Association
Under sec 36(now section 10 of companies act 2013), the memorandum and the articles when registered, shall bind the company and its members to the same extent as if it had been signed by them and had contained a covenant on their part that the memorandum and the articles shall be observed.
With respect to the above section, the importance of articles of association can be summed up as follows:
Notes on company law
Course: Corporate Law (BLAW 2001)
University: Savitribai Phule Pune University
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