COMPANY LAW

THE COMPANIES ACT,

1956
OBJECTS OF COMPANY LAW

1
1. TO ENCOURAGE INVESTMENTS
2. TO ENSURE PROPER ADMINISTRATION
3
3. TO PREVENT MALPRACTICES &
4. TO ALLOW FOR INVESTIGATIONS
DEFINITION

THE COMPANIES ACT, 1956

DEFINES A COMPANY AS:
A Joint Stock Companyp y means a company
p y havingga
permanent paid up or nominal share capital of fixed
amount divided into shares also of fixed amount, or
h ld and
held d ttransferable
f bl as stock
t k or didivided
id d and
dhheld
ld
partly in one way and partly in the other. Such a
company when registered with limited liability under
this Act shall be deemed to be a company limited by
shares.
ESSENTIALS OF A COMPANY

REGISTRATION
DISTINCT PERSON- SEPARATE LEGAL ENTITY
PERPETUAL SUCCESSION
ARTIFICIAL PERSON BUT NOT A CITIZEN
TRANSFERABLE SHARES
LIMITED LIABILITY
COMMON SEAL
SEPARATE PROPERTY
CAPACITY TO SUE AND BE SUED
 TYPES OF COMPANIES
OR CORPORATIONS

ROYAL CHARTER
STATUTORY REGISTERED
OR
COMPANIES COMPANIES
CHARTERED
COMPANIES

COMPANIES COMPANIES
UNLIMITED
LIMITED LIMITED
COMPANIES
BY SHARES BY GUARANTEE

PUBLIC
COMPANIES

PRIVATE
COMPANIES
DIFFERENCE BETWEEN PUBLIC
AND PRIVATE COMPANY
MEMBERSHIP
TRANSFER OF SHARES
PUBLIC INVITATION
NAME OF COMPANY
PRIVILEGES
NUMBER OF DIRECTORS
RESTRICTIONS ON APPOINTMENT OF DIRECTORS
LEGAL CONTROL
MINIMUM PAID UP CAPITAL
SPECIAL PRIVILEGES OF A PRIVATE
COMPANY OVER PUBLIC COMPANY
1. MINIMUM NO. OF MEMBERS 2

2. NO PROVISIONS REGARDING MINIMUM SUBSCRIPTION

3. FILING OF PROSPECTUS OR STATEMENT IN LIEU OF

PROSPECTUS - no need.

4. FURTHER SHARE ISSUE

5. IT CAN ISSUE SHARE CAPITAL OF ANY KINDS

6. COMMENCEMENT OF BUSINESS

7. NEED NOT KEEP INDEX OF MEMBERS

8. NEED NOT HOLD STATUTORY MEETING OR FILE

STATUTORY REPORT

9. PROVISIONS OF MAXIMUM DIRECTORS OR MANAGERS

REMUNERATION DOES NOT APPLY
10. MINIMUM NUMBER OF DIRECTORS 2

11. RETIREMENT BY ROTATION FOR DIRECTORS NOT THERE

12. DIRECTORS CONSENT TO ACT AS SUCH NOT REQUIRED

13. QUALIFICATION SHARES NOT NEEDED FOR APPT. OF DIRECTORS

14. GOVERNMENT APPROVAL TO APPOINTMENT OR AMENDMENT DO NOT

APPLY

15. DIRECTORS CONTRACT TO TAKE QUALIFICATION SHARES NOT TO BE

FILED WITH THE REGISTRAR

16. PROVISIONS REGARDING LOANS TO DIRECTORS DO NOT APPLY

17. NO PROVISION REGARDING INTERESTED DIRECTOR NOT TO PARTICIPATE

OR VOTE IN BOARD PROCEEDINGS

18. NO PROVISIONS FOR GOVT. APPROVAL FOR INCREASING REMUNERATION

19. NO PROHIBITION REGARDING APPOINTMENT OF M.D.FOR MORE THAN

5YEARS AT A TIME

20. NO RESTRICTIONS ON ADVANCING LOANS TO OTHER COMPANY

PROCEDURE OF CONVERTING A PRIVATE
COMPANY INTO A PUBLIC LIMITED
COMPANY
Alter the articles of the company p y by y special
p
resolution to eliminate restrictions of private
company under sec(3) (iii)
If the number of members is less than 7,7 it must be
raised atleast to 7
If the number of directors is less than 3 it must be
raised atleast to 3.
It must file within 30 days with the Registrar
prospectus or statement in lieu of prospectus & the
resolution altering the articles.
PROCEDURE FOR CONVERTING A
PUBLIC COMPANY TO PRIVATE
COMPANY
Pass a special
p resolution authorizingg conversion of
the company and altering the articles so as to
contain the restrictions under section 3(1) (iii) of the
Act
Change the name of the company by a special
resolution
Obtain Central Government approval
File the altered articles with the Registrar within 30
days of the receipt of the approval from the Central
Government
WHEN A PRIVATE COMPANY
BECOMES A PUBLIC COMPANY
BY DEFAULT OF PROVISIONS
SUBSIDIARY COMPANY- DEEMED TO BE
PUBLIC
BY PROVISIONS OF LAW
Where not less than 25% of paid-up capital of pvt.
Company is held by one or more bodies corporate
Where the average turnover of a private company is not
less than Rs.10 cr. During the relevant period after 3
months
When a private company holds not less than 25% of the
paid
id up capital
it l off a public
bli company
BY CONVERSION
HOLDING COMPANY &
SUBSIDIARY COMPANY
When one company controls another company it is
called holding company.
Control may be in any following ways:
Where it controls the composition of the Board of
Directors of another company; or
Where it controls more than half of the total voting
g
power of the other company; or
Where it holds more than half of the nominal value
of equity share capital of the other company; or
Where it is a subsidiary of any company which is the
subsidiaryy of some other company.
p y
ONE MAN COMPANY
WHEN A SINGLE PERSON HOLDS ALMOST
ALL THE SHARES OF THE COMPANY IT IS
CALLED ONE MAN COMPANY.
COMPANY SUCH A
COMPANY HAS ITS LEGAL PERSONALITY
IF IT COMPLIES WITH THE NECESSARY
REQUIREMENTS OF REGISTRATION,
REGISTRATION IT
MAY BE A PUBLIC OR PRIVATE
COMPANY.
 COMPANIES REGISTERED FOR
PROMOTING COMMERCE, ART,
SCIENCE ETC
SCIENCE, ETC.
Central Govt. has powers u/s 25 to direct by
license that the association may be registered
as a company with
ith limited
li it d liability
li bilit without
ith t the
th
addition to its name of the word Limited or
words Pvt. Ltd. in the some cases.
 GOVERNMENT COMPANY
IT IS A COMPANY IN WHICH NOT LESS THAN 51% OF THE PAID-UP SHARE
CAPITAL IS HELD BY ONE OR MORE OF THE FOLLOWING OR ANY
COMBINATION THEREOF, AS IF IT WERE A GOVT. CO. NAMELY;

The Central Gov. & one or more Govt. Co.

A State
Any S G
Gov. or Govts
G and
d one or more Govt.
G C
Co.;

The Central Govt., one or more State Govt. and one or more Govt. Companies;

The Central Govt.

Govt and one or more corporations owned or controlled by Central
Govt.;

The Central Govt., one or more State Govt. and one or more Corps. Owned or
controlled by the Central Govt.

One or more corps. Owned or controlled by Central Govt. or State Govt.

More than one Govt. Company

FOREIGN COMPANIES
A company incorporated outside
India is a foreign company which
has a place of business in India.
 ILLEGAL ASSOCIATION
ANY COMPANY, ASSOCIATION OR PARTNERSHIP
CARRYING ON BANKING BUSINESS WITH MORE
THAN TEN MEMBERS OR CARRYING ON ANY OTHER
BUSINESS WITH MORE THAN TWENTY MEMBERS
THAT HAS FOR ITS OBJECT THE ACQUISITION OF
GAIN, WITHOUT BEING REGISTERED UNDER THE
COMPANIES
CO ACT,
C , SHALL BE CONSIDERED AN
ILLEGAL ASSOCIATION.
MEMORANDUM OF
ASSOCIATION
&
ARTICLES OF
ASSOCIATION
DEFINITION
MEMORANDUM MEANS THE Memorandum of
Association of a company as originally framed or
as altered from time to time in pursuance of any
previous companies law or of this Act.
It is
i the
th document
d t which
hi h contains
t i th rules
the l
regarding constitution and activities or objects of
the company.
company
It is designed to make the outside world know
the state of affairs of the company.
company
The company is allowed to function within the
frame work of MOA
CONTENTS OF MOA.

1
1. NAME CLAUSE
2. REGISTERED OFFICE OF THE COMPANY
3
3. OBJECTS CLAUSE
4. CAPITAL CLAUSE
5. LIABILITY CLAUSE
6. SUBSCRIPTION OR ASSOCIATION
CLAUSE
FORMS OF MOA.
1. TABLE B- CONTAINS MOA OF COMPANY
LIMITED BY SHARES
2. TABLE C- CONTAINS MOA OF COMPANY
LIMITED BY GUARANTEE AND NOT
HAVING A SHARE CAPITAL
3
3. TABLE D D- CONTAINS MOA OF A
COMPANY LIMITED BY GUARANTEE
AND HAVING SHARE CAPITAL
4. TABLE E- CONTAINS MOA OF AN
UNLIMITED COMPANY
ARTICLES OF ASSOCIATION

The Articles contain rules and regulations

for the internal management of the company
subject
j to the pprovisions of the Companies
p
Act.
Members can within the frameframe-work,
work, make
their regulations through AOA subject to the
Companies
p Act
CONTENTS OF ARTICLES
Share capital and alteration thereof
Payment, calls, transfer, lien, transmission, forfeiture
etc of shares
etc.
Share certificates and warrants
Rights of shareholders
Meetings of the company
Appointment, remuneration, qualifications, powers,
etc of Board of Directors
etc.
Accounts and audit
Dividends
Indemnity
Winding up
DOCTRINE OF ULTRA VIRES
Any act done by the company which is neither
authorized by its objects nor by the
companies
p act,, that act is called ultra vires
the powers and authority of the company.

An act which is ultra vires the company is void

and cannot bind the company.
company
MOA AOA
1. Determines the 1. It contains rules and

constitution and regulations of internal

activities of the co.
co management of co. co
2. It is fundamental 2. It is subsidiary to

charter MOA& if conflicting,g

3. Every co. must have a
MOA would prevail
MOA 3. Public company

4. Alteration of MOA is
limited by shares may
difficult or may not have AOA
4
4. Alteration is easier by
special resolution
CONSTRUCTIVE NOTICE OF
MEMORANDUM AND ARTICLES
MOA & AOA of company are public
documents lodged with Registrar of
Companies.
p
They being public, it is the duty of every
person to inspect the documents before
dealing with the company.
Thus MOA & AOA of a company are
presumed to be notice to the public. Such a
notice is called Constructive Notice
DOCTRINE OF INDOOR
MANAGMENT
Every person is presumed to read MOA &
AOA but he is not bound to inquire into the
internal affairs of the company
p y whether theyy
are being conducted in accordance with the
Articles of the co.
This limitation to doctrine of constructive
notice is called indoor management.
g
MEMBERSHIP OF A
COMPANY
MEMBERSHIP OF COMPANY
The subscribers to the memorandum of a company
shall be deemed to have agreed to become members of
th company and
the d on its
it registration,
i t ti shall
h ll be
b entered
t d as
members in the Registrar of Members;

Every other person who agrees in writing to become

member of a company
p y and whose name is entered in its
register of members, shall be a member of company;

Every person holding equity share capital of company

and whose name is entered as beneficial owner in the
records of the depository shall be deemed to be a
member of the concerned company.
How Membership ceases?
By transfer of shares;
By forfeiture of shares;
By surrender of shares;
By sale of shares by the company after it exercises its
right of lien on the shares or in execution of a decree by
Court or other proper authority;
By insolvency;
By death;
B rescission
By i i off the
th contract
t t to t take
t k shares
h on the
th
ground of misrepresentation in the prospectus
When the company redeems its redeemable preference
shares
h
On issue of share warrants by company in place of
certificates;
O winding
On i di up off the
h company
WHO CAN BE A MEMBER?
MINOR
COMPANY AND SUBSIDIARY CO.
CO
TRUST
PARTNERSHIP FIRM
SOCIETY
NON-RESIDENT
RIGHTS
To receive notices of all general meetings
To attend and vote at general meetings, appoint
directors and auditors of the company
To receive copies of accounts of the company
In case of a statutory meeting, he is entitled to a copy of
statutory report
To inspect the minutes of proceedings of any general
meeting g
To inspect the register and index of members and
debenture holders and copies of annual returns
If his name is omitted in the register of members,
members he can
apply to the Court for the rectification of the register
To transfer his shares
RIGHTS Contd.
Priorityy to have shares offered to him in case of increase of
capital by the company
To receive share certificate
To receive dividends in case of preference shares
To rescind the contract and claim damages in case of his
acquiring shares on account of mis-statements in
p p
prospectus
To make an application to Central Government for ordering
investigation into the affairs of the Co.
To present a petition to the Court for relief in participate
rateably in the dividend distribution
To apply to the Central Govt. to convene the AGM when
Board of Directors fail to convene the same
To present a petition to the Court for winding up of the Co.
Entitled to share in the surplus assets, if available, on
liquidation
LIABILTIES, DUTIES & OBLIGATION
To pay calls on the shares whenever
d
demanded
d d by
b the
th company
To pay the full nominal value of the shares
h ld by
held b him
hi in i case off a company limited
li it d by
b
shares
T pay allll the
To th debts
d bt off the
th company ini case
of a company unlimited by liability
Prospectus
PROSPECTUS
Prospectus means any document described or
issued as a prospectus and includes any
notice, circular, advertisement or other
document inviting deposits from the public or
inviting offers from the public for the
subscription or purchase of any shares in, or
debentures of a Body Corporate.
Abridged Prospectus
It means a memorandum containing such
salient features of a prospectus as may be
prescribed.
Any written invitation inviting a person to
submit requests for purchasing or subscribing
purchases of shares for cash will be a
prospectus.
CONTENTS OF THE PROSPECTUS
Dating of the Prospectus
Registration of the Prospectus
Experts Consent
Delivery for Registration
News paper advertisement
Misstatements in the Prospectus
Untrue statements
Statements which produce wrong impression
Statements which are mis-leading
Concealment of material facts
Omission of facts
 Liability of Mis
Mis-statement
statement

Civil Liability
Compensation
Damages for deceit or fraud
Reission of the contract for misrepresentation
Liability for non compliance with Sec. 56
Liability under general law
Penalty for contravening sections 57 or 58
Penalty for issuing the prospectus without delivering for
registration

Criminal Liability
 STATEMENT IN LIEU OF

PROSPECTUS
A company having a share capital which does not issue a
prospectus or which has issued a prospectus but has not proceeded
to allot any of the shares offered to the public for subscription, shall
not allot any of its shares or debentures, unless at least 3 days
b f
before th allotment
the ll t t off shares
h or debentures,
d b t th
there h
has b
been
delivered to the Registrar for registration a statement in lieu of
prospectus signed by every person who is named therein as a
prospectus
director or proposed director of the company or by his agent
authorized in writing,
g, in the form and containing
g the p
particulars
setout in Part I of schedule III and setting out the reports specified in
Part II of schedule III subject to the provisions contained in Part III of
that schedule.
Shelf Prospectus

Any public financial institution, public sector

bank or scheduled bank whose main object is
financing shall file a shelf prospectus.
Shelf
Shelf Prospectus
Prospectus means a prospectus
issued by any financial institution or bank for
one or more issues of the securities or class
of securities specified in that prospectus.
 MINIMUM SUBSCRIPTION
NO ALLOTMENT SHALL BE MADE OF ANY SHARE CAPITAL OF A COMPANY OFFERED
TO THE PUBLIC FOR SUBSCRPTION UNLESS THE MINIMUM AMOUNT IS RAISED. THIS
MINIMUM AMMOUNT IS CALLED MINIMUM SUBSCRIPTION
IT IS DECIDED TAKING INTO ACCOUNT:
Purchase price of any property
Any preliminary expenses payable
Any commission payable towards subscription of any shares
The repayment of any money borrowed by the company
Working capital
Any other expenditure
All moneys received from applicants for shares shall be deposited and kept deposited in a
S h d l d Bank-
Scheduled B k
Until the certificate of commencement business is obtained and
Until the entire amount payable on applications for shares in respect of minimum
subscription is received (interest 6% after 130 days)
PROSPECTUS
Prospectus means any document described or
issued as a prospectus and includes any
notice, circular, advertisement or other
document inviting deposits from the public or
inviting offers from the public for the
subscription or purchase of any shares in, or
debentures of a Body Corporate.
Abridged Prospectus
It means a memorandum containing such
salient features of a prospectus as may be
prescribed.
Any written invitation inviting a person to
submit requests for purchasing or subscribing
purchases of shares for cash will be a
prospectus.
CONTENTS OF THE PROSPECTUS
Dating of the Prospectus
Registration of the Prospectus
Experts Consent
Delivery for Registration
News paper advertisement
Misstatements in the Prospectus
Untrue statements
Statements which produce wrong impression
Statements which are mis-leading
Concealment of material facts
Omission of facts
 Liability of Mis
Mis-statement
statement

Civil Liability
Compensation
Damages for deceit or fraud
Reission of the contract for misrepresentation
Liability for non compliance with Sec. 56
Liability under general law
Penalty for contravening sections 57 or 58
Penalty for issuing the prospectus without delivering for
registration

Criminal Liability
 STATEMENT IN LIEU OF

PROSPECTUS
A company having a share capital which does not issue a
prospectus or which has issued a prospectus but has not proceeded
to allot any of the shares offered to the public for subscription, shall
not allot any of its shares or debentures, unless at least 3 days
b f
before th allotment
the ll t t off shares
h or debentures,
d b t th
there h
has b
been
delivered to the Registrar for registration a statement in lieu of
prospectus signed by every person who is named therein as a
prospectus
director or proposed director of the company or by his agent
authorized in writing,
g, in the form and containing
g the p
particulars
setout in Part I of schedule III and setting out the reports specified in
Part II of schedule III subject to the provisions contained in Part III of
that schedule.
Shelf Prospectus

Any public financial institution, public sector

bank or scheduled bank whose main object is
financing shall file a shelf prospectus.
Shelf
Shelf Prospectus
Prospectus means a prospectus
issued by any financial institution or bank for
one or more issues of the securities or class
of securities specified in that prospectus.
 MINIMUM SUBSCRIPTION
NO ALLOTMENT SHALL BE MADE OF ANY SHARE CAPITAL OF A COMPANY
OFFERED TO THE PUBLIC FOR SUBSCRPTION UNLESS THE MINIMUM
AMOUNT IS RAISED. THIS MINIMUM AMMOUNT IS CALLED MINIMUM
SUBSCRIPTION
IT IS DECIDED TAKING INTO ACCOUNT:
Purchase p
price of any
ypproperty
p y
Any preliminary expenses payable
Any commission payable towards subscription of any shares
The repayment of any money borrowed by the company
Working capital
Any
y other expenditure
p
All moneys received from applicants for shares shall be deposited and kept
deposited in a Scheduled Bank-
Until the certificate of commencement business is obtained and
Until the entire amount payable on applications for shares in respect of minimum
subscription is received (interest 6% after 130 days)
ISSUE OF CAPITAL
&

MANAGEMENT
ISSUE OF CAPITAL
AUTHORISED OR NOMINAL CAPITAL
ISSUED
SSU C
CAPITAL
SUBSCRIBED CAPITAL
PAID-UP CAPITAL
UN-CALLED CAPITAL
 Example
A companyp y is registered
g with Rs. 5 lacs initiallyy as the total
share capital. This is Authorized or Nominal capital. This
capital is divided in shares of different denominations, for
example Rs.
example, Rs 5 lacs may be divided into 5000 equity shares
of Rs. 100 each. The face value of the shares is, therefore,
Rs. 100 each.
The company may require only about Rs. 2.5 lacs
immediately for carrying out its objects and activities. It
may therefore,
may, therefore issue only 2,500
2 500 shares of Rs.Rs 100 each.
each
This is Issued capital.
If all the shares offered or issued are taken up by the public
it becomes' subscribed capital.
Further the minimum requirement of the company initially
may be only Rs.Rs 1 lac.
lac It may,
may therefore,
therefore call up only Rs.Rs 25
on each subscribed share. This will be a Called-up capital.
When all the 2500 shares are paid up by Rs. 25 on each
 SHARE STOCK
1. Sh
Shares cannott be
b 1. Stock can be divided
issued or transferred into unequal amount
in fragments and therefore can be
2. Shares need not be issued and transferred
fully paid up in fragments
3. Shares bear 2. Stock is always fully
distinctive numbers paid up
4. Sh
Shares are issued
i d 3. F ti
Fractions off stock
t k do
d
directly not bear distinctive
numbers
4. Stock cannot be
issued directly
 CLASSIFICATION OF SHARES
PREFERENCE SHARES
Are those which have two characteristics, viz;
(i) th
they h
have a preferential
f ti l right
i ht tto b
be paid
id
dividend during the lifetime of the company
and (ii)they have a preferential right to the
return of capital when the company goes into
liquidation
Cumulative/Non Cumulative, Participating/Non
Participating Convertible/ Non Convertible
Participating,
EQUITY SHARES
OPPRESSION & MANAGEMENT
Grounds of Application to Company Law Board:
1. P j di i l to
Prejudicial t public
bli interest;
i t t or
2. In a manner oppressive to any member; or
3. In a manner prejudicial to the interests of a
company; or
4. Th t a material
That t i l change
h h taken
has t k place
l i the
in th
mngt. Or control of Co., it is likely that the
affairs of the Company will be conducted in a
manner prejudicial to public interest or interest
of company.
p y
MEETINGS

GENERAL MEETINGS
STATUTORY MEETING( 1 TO 6TH MONTH)
ANNUAL GENERAL MEETING(15
( MONTHS))
EXTRA ORDINARY GENERAL MEETING
CLASS MEETINGS
MEETINGS OF CREDITORS AND
DEBENTURE HOLDERS
MEETINGS OF DIRECTORS OR BOARD
MEETINGS (QUARTERLY; QUORUM-1/3RD)
RESOLUTIONS

ORDINARY SPECIAL
RESOLUTION RESOLUTION
Notice need not Notice must specify
specify
if the
h intention
i i the
h i
intention
i to
to move the ordinary purpose the
resolution
resolution. resolution as a
Votes cast in favour special resolution.
of a resolution are Votes cast in favour
more than the votes are atleast 3 times the
cast against number of votes
against
Inspection of Minute Books

The books shall:

1. Be kept at registered office of Company
2
2. Be open during business hours for atleast 2
hours each day for inspection
DIRECTORS
Directors include any person occupying the
position of a director byy whatever name called.

Number of Directors :
3 in public Co.
2 in other Co.
First Directors:
Persons who are named in Articles
or Subscribers to the Memorandum
Appointment of Directors
Appointment by election
Appointment
pp by
y nomination byy Board of Directors-
Casual Vacancy
Appointment by nomination by the Central
Government
Appointment by nomination in statutory Corporation
Other Requirements:
1. Qualification Shares
2. Filing of Consent
3. Notice
4. Method of Voting
5. Alternate directors
6. Amendment
DISQUALIFICATION OF
DIRECTOR
No body corporate, association, or a firm can be
appointed
pp
He has been found to be unsound mind
Undischarged insolvent
Applied for insolvency
He is convicted by a Court for not less than 6
months and 5 years have not elapsed
He has not paid any call in respect of shares and
6 months have elapsed from last date fixed for
paymentt off the
th callll
Order disqualifying him for appointment as
director has been p passed byy court- g
guilty
y of
fraud
RETIREMENT

Proportion of Directors to retire by rotation 1/3rd

rotation-1/3
Vacancy to be filled at AGM , if not then retiring
directors will be deemed to be re-elected
Resignation of office of director

RESTRICTION- HOLDING OFFICE OF

DIRECTOR
C O FOR
O NOT
O MORE
O THAN 20
0
COMPANIES.
Managing Director

The director who is entrusted with substantial

powers of management and includes a
director occupying
py g the pposition of Managing
g g
Director by whatever name called.
He is contract with company for his services
and is a whole time director entrusted with
certain duties and responsibilities.
p
MODES OF APPT. OF MD.

BY AGREEMENT WITH COMPANY

BY A CLAUSE IN MOA. OR AOA.
BY A RESOLUTION PASSED BY
COMPANY IN GENERAL MEETING
BY A RESOLUTION PASSED BY B B.O.D.
OD
DISQUALIFICATION OF MD.

INSOLVENT
SUSPENDED PAYMENT OF HIS CREDITOR
CONVICTED BY COURT
ALL DISQUALIFICTIONS OF DIRECTOR

LIMIT: ONLY ONE PUBLIC CO. & SECOND

LIMIT:-ONLY
WITH:
1. A RESOLUTION OF BOD.
2. OR SPECIAL ORDER BY CENTRAL GOVERNMENT

TERM:- NOT EXCEEDING 5 YEARS

REMUNERATION

AS DETERMINED IN ARTICLES
OVERALL MANAGERIAL REMUNERATION
SHOULD NOT EXCEED 11% OF THE NET
PROFIT
DIRECTOR OTHER THAN MD.MD MAY BE
ALLOWED COMMISSION NOT
EXCEEDING 1% OF NET PROFIT
POWERS OF DIRECTORS

MAKE CALLS
ISSUE DEBENTURES
BORROW MONEY
INVEST FUNDS
MARKET LOANS
LIMITATIONS OF DIRECTOR

SELL, LEASE ETC.

SELL ETC THE WHOLE
UNDERTAKING
REMIT OR GIVE TIME FOR THE
REPAYMENT OF ANY DEBT BY A
DIRECTOR
INVEST OR BORROW MONEY IN
CONTRAVENTION OF ACT.
ACT
CHARITY OF MORE THAN Rs.50,000.
RIGHTS:
1. TO TAKE PART IN MEETINGS OF BOARD & IN THE
AFFAIRS OF THE CO.
2
2. RIGHT OF REMUNERATION
3. COMPENSATION IN CASE OF PREMATURE
TERMINATION OF SERVICES
DUTIES:
1. DISTRIBUTE WORK ON BUSINESS LINES
2. ACT IN GOOD FAITH
3. EXERCISE REASONABLE CARE
4. MUST EXERCISE THAT SKILL WHICH IS
REASONABLY EXPECTED OF HIM
5
5. ATTEND MEETING
LIABILITY

CIVIL:
1. FALSE STATEMENT IN A PROSPECTUS
2. EXCEED AUTHORITY
3. IN CASE OF ULTRA-VIRES ACTS
4. WHERE HE IS NEGLIGENT AND CO. SUFFERS
5. MAKES A SECRET PROFIT
6. COMMITS ANY BREACH OF TRUST
CRIMINAL: FALSIFICATION OF BOOKS &
CRIMINAL
REPORTS FAILURE TO KEEP CERTAIN
REGISTER