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What is a company?
- Company is an association of persons registered under the Companies Act, 1956.
- It has a legal personality separate from the persons who own or manage it.
What are the different types of companies?
A company can be:
- Private Limited Company
- Public Limited Company
- Unlimited Liability Company
- Non - profit Organizations (section 25 company)
What are the salient features of a Private Limited Company?
- Minimum 2 members and 2 directors required to form a private company
- Maximum 50 members
- Name shall end with ‘Private Limited’
What are the salient features of a Public Limited Company?
- Minimum 7 members and 3 directors required to form a Public Limited Company
- No restriction on maximum number of members
- Name shall end with the word ‘Limited’
What is a Non profit Organization (section 25 company)?
- Object of a section 25 company is not to make profit
- It is formed for the purpose of promoting commerce, art, science, religion, charity, etc.
- Registration requires prior permission of central government
- The words ‘Private Limited’ or ‘Limited’ can be dispensed from the name
What is a Foreign company?
A foreign company is one that is registered outside India, under a foreign law other than Indian law.
How can a Foreign company enter into India?
- Subject to approval of RBI, a foreign company can open a branch/liaison office in India.
- Upon receipt of RBI approval, such branch/liaison office has to be registered with the office of Registrar of Companies, New Delhi.
What is meant by the phrase 'limited liability'?
Limited liability means:
- Liability of a member is limited to the extent of his shareholding in the company
- Shareholder is not personally liable for the liabilities of the company
- The member’s liability is limited to the unpaid amount on shares registered in his name
What are the main features of the name of a company?
- Name shall be unique for registration
- The name of a Private/Public company shall end with the words “Private Limited” or “Limited” respectively
- Name shall comply with the guidelines of name availability prescribed by the Ministry of Corporate Affairs.
What are the 'objects' of a company?
- A company is promoted to carry certain activities. Such activities are called ‘objects’.
- The main object of company should be detailed in memorandum of association of company.
What is 'capital' of a company?
- Contribution of shareholders towards the corpus of the company is called capital of the company.
- Capital is divided into smaller units called ‘shares’.
What is Authorized/Registered capital of a company?
- It is the upper ceiling limit of capital which a company can issue shares and collect money from shareholders.
- Authorized capital can be enhanced by a resolution at a meeting of the shareholders.
What is issued capital?
That portion of authorized capital which the company has issued to its shareholders is called issued capital.
What is called up capital?
That portion of issued capital that the shareholders are requested to pay to the company is called up capital.
What is the role of a director in a company?
A director is responsible for all legal compliance under various laws and the management of affairs of the company.
What is the 'Memorandum of Association '?
Memorandum of Association is the Charter document, by which a company is registered. It contains the following:
- name of the company
- state in which the registered office of the company is situated
- objects of the company
- Capital and subscribers/promoters/first shareholders of the company
What is 'Articles of Association'?
Articles of Association is:
- the bylaws for the internal management of a company
- defines the relationship of members and directors
- restricts powers of directors, transfer of shares etc.
What is 'registered office' of a company?
Registered office is the principal place of business and is used for all official communication of the company.
What is Corporate Identification Number (CIN)?
CIN is the unique number issued by the Ministry of Corporate Affairs to a company registered in India.