The word
'Company' is an amalgamation of the Latin word 'Com' meaning "with or
together" and 'Pains' meaning "bread". Originally, it referred
to a group of persons who took their meals together. A company is nothing but a
group of persons who have come together or who have contributed money for some
common person and who have incorporated themselves into a distinct legal entity
in the form of a company for that purpose. Company law (or the law of business associations) is the field of law concerning companies and other business
organizations. This includes corporations, partnerships and other associations
which usually carry on some form of economic or charitable activity. The most
prominent kind of company, usually referred to as a "corporation", is
a "juristic person", i.e. it has separate legal personality, and
those who invest money into the business have limited liability for any losses
the company makes, governed by corporate law. The largest companies are usually
publicly listed on stock exchanges around the world. Even single individuals,
also known as sole traders may incorporate themselves and limit their liability
in order to carry on a business. All different forms of companies depend on the
particular law of the particular country in which they reside.
Please note
that the process of formation of a company in India has three stages viz.
Promotion stage, Incorporation Stage and Commencement of Business stage.
Promotion
Stage: The formation of a company begins with an idea. The manner in which the
idea will work or can be implemented is termed as promotion of a company. The
person or persons who are involved in promotion are called
"Promoter(s)". The promoters are well in advance needed to decide
about the product to be produced, the size of the company, the capital involved
in the project, the sources of the capital and whether it shall be a Private
Company or a Public Company etc before the formation of the company. In case of
a Private Company, at least 2 persons or in case of a Public Company at least 7
persons shall subscribe their names to a Memorandum of Association (MoA) and
they shall also comply with the other formalities in respect of the
registration of the company under the Indian Companies Act, 2013. After the
above process they approach the RoC with the MoA. Registrar of Companies (ROCs)
is appointed under Section 609 of the Companies Act, covering various States
and Union Territories. RoC are vested with the primary duty of registering
companies floated in the respective States and the Union Territories and
ensuring that such companies comply with the statutory requirements under the
Act. The offices function as registry of records relating to the companies
registered with them. In beginning it is always advisable that the promoters
should check with the registrar the name of their new company because, if
already a company with such name is existing, it shall not be allowed by the
Registrar, because two companies with the similar name cannot be registered. If
no other company is registered with that name, an application for the
registration of the company should be presented to the Registrar of the State.
Memorandum
of Association
Articles of
Association, if any which should be signed by the subscribers to the Memorandum
of Association.
Any agreement with the individual persons who
are proposed to e appointed as Managers, Directors or Managing Director of the
company.
A statement of the nominal capital of the
Company. A notice of address of the registered office of the company.
List of the
Directors who have agreed to become the first Directors of the company along
with their consent to act as Directors and to take up the qualification shares of
the company in the case of a public company.
Other declarations and documents
Incorporation & Commencement Stage: If the
Registrar of Companies is satisfied that the entire requirement has been
fulfilled then he will register the company and enter the name of the company
in the Register of Companies. This stage is known as ‘Incorporation Stage’.
When a company is registered and its name in entered in the register of
companies, the Registrar will issue a Certificate of Incorporation.
Company Act,
2013 In India the journey of company law started under the Companies Act, 1956
but in the year 2013 new company law was enacted by the Parliament which
finally received the president’s acceptance and was made effective w.e.f.
12-09-2013. The new has brought in some changes to the existing one and has
also introduced some new concepts in the field of company law. Some of thesalient features of the new law are as follows:
1. Democracy
of Shareholders: The new law has introduced new concept of class action suits
with a view of making shareholders and other stakeholders more informed and
knowledgeable about their rights so that they can be saved from exploitation.
2.
Strengthening Women Contributions through Board Room: The new act stipulates
appointment of at least one woman Director on the Board of the prescribed class
of Companies so as to widen the talent pool enabling big Corporates to benefit
from diversified backgrounds with different viewpoints.
3. National
Company Law Tribunal: The act has also introduced National Company Law Tribunal
(NCLT) and the National Company Law Appellate Tribunal (NCLAT) to replace the
Company Law Board and Board for Industrial and Financial Reconstruction. This
has been done to release courts from the over burden which they faced.
4. Increase
in number of Shareholders: The 2013 act has increased the number of maximum
shareholders in a private company from 50 to 200.
5. One
Person Company: The new act has also introduced a new form of private company,
i.e., one person company that may have only one director and one shareholder.
6. Corporate
Social Responsibility: The 2013 act stipulates certain class of Companies to
spend a certain amount of money every year on activities/initiatives reflecting
Corporate Social Responsibility. There may be difficulties in implementing in
the initial years but this measure would help in improving the Under-privileged
& backward sections of Society and the Corporate would in fact gain in
terms of their reputation and image in the Society.
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