COMPANY LAWCompany Law is that branch of law which deals exclusively with all aspects relating to the companies, such as Incorporation of companies, Allotment of Shares, share capital, Membership in Companies, Management & Winding of company . Application of Companies Act, 1956 : 1) Companies registered under companies act . 2) Companies registered any previous companies acts. 3)Unlimited Companies registered as limited companies in pursuance any previous Companies Act . 4) Banking, Insurance & Electricity Companies not covered by their Respective Acts . 5) Government Companies . 6) Nidhis are Mutual benefit societies declared as such under notification by the central Government . w w w w w w w OBJECTIVES OF THE COMPANIES ACT : 1) To Protect the Interest of the Share Holders . 2) To Protect the Interest of Creditors . 3) To Enforce proper Performance of Duties . 4) To prevent Misconduct and Malpractices . 5) To promote Healthy Growth of the Companies 6) To Ensure that the Activities of the Company are carried also in Furtherance of the Economic & Social Policy . 7) To Empower the Government to Interfere & Investigate . COMPANY The Companies ( amendment ) Act, 1956, defined company as “A company performed and registered under this act or an existing company . “ A joint stock company is a voluntary association of persons performed for some common purpose with capital devisable into parts, known as shares and with limited liability . It is a creation of the law and is also known as an artificial person with perpetual succession and a common seal . An incorporated company is a totally different person or thing or entity from its members or the individuals composing it . > Limited liability of members . > Separation of ownership with management . > Control of company by acquiring majority shares . 2) Incorporate or registered Association : Under Companies Act. . > It contributes to large ownership .Advantages of Registration : > Separate legal existence . > Transferability of shares . which absolutely necessary for an association of persons or company to become JSC . CHARACTERISTICS OR FEATURES OF JSC : The main features of JSC are as follows : 1) Voluntary Association : Or Organizations of persons free to become member & can live in membership . 4) Not a citizen : It cannot claim to be a citizen of the country . 6) Separate property : JSC has the right to own. domicile or residence for jurisdiction of court and income tax matters . 5) Separate legal entity or corporate personality or veil of Incorporation : E. . 3) Specific Objective : Stated in MOA . enjoy and dispose of property in its own name . d) Artificial person created by law : It has no physical and natural existence . Salmon VS salmon & company limited . But it has nationality.g. common seal ) which is kept in the custody of security of the company SECRATORY.e. so there must be a device which could serve as the companies signature as a official signature ( i.7) Perpetual succession or Continuous Existence : i. 8) Common seal : As company is a artificial person.e. . Members may come and go . But the company goes on until it is wound up according to law . e. limited by shares ( the amount paid ). EXCEPTIONS : LIFTING or PIERCING CORPORATE VEIL . There is a VEIL or CURTAIN separating a JSC from its membership . k) Transferability of shares : i. freely transferable.e. Board of directors control management . .e. which provide liquidity to the investors . share holders directly cannot participate in the management . 11) Separation of ownership from management :As JSC has a distinct or separate legal entity of its own. 9) Limited liability of the members : i. 10) Large membership : No maximum limit . i. 1) Under judicial interpretation : > For determining the character of the company .LIFTING PIERCING THE CORPORATE VEIL : ( PCV ) This Doctrine is an exception of company’s feature “separation of legal entity” .( mere cloak or hoax ) . 2) Under Express Statutory Provisions . > Where a company is a shame . > For protecting the revenue of the government. PCV states in certain circumstances . The VEIL can be LIFTED under two circumstances 1) Under judicial interpretation . The court ignore the separate legal entity of the company. > For preventing fraud . and treat the company and it’s members as one person “. > For protecting public policy . > When there is holding & subsidiary company under suspicious . > Where company acts as agent or trustee of members . > Failure to repay the application money .( relations ) . > Fraudulent conduct of business . 2) Under statutory provisions : > Reduction in members below statutory minimum limit . > Directors or members violating company act . > Misdiscription of companies name . > Misstatement in prospectus . 8) Liability . 11) Profit Sharing. 3) Number of Members . 9) transfer or Shares . 4) Property Ownership . 12) Death/Insolvency/Incapacity of members. 10) Statutory Obligations . 1) Regulating Act . 5) Company or Single person . . 7) Perpetual Succession . 6) Management . 2) Mode of Creations . COMPANY VS PARTNERSHIP :The company and partnership firm can be differentiated based on following characteristics. 2& max. . b) Public company : ( min. unlimited ) . (LIC. max. 2) ON THE BASIS OF LIABILITY : a) Limited by shares . shares . 3) ON THE BASIS OF NUMBER OF MEMBERS : a) Private company : ( min. UTI) b) Non government company . 4) ON THE BASIS OF CONTROL : a) Holding company : (>50%) . b) Limited by guarantee c) Unlimited companies. 5) ON THE BASIS OF OWNERSHIP : a) Government company. 7. Private company to Public company . b) Subsidiary company : control of BoD. KINDS OF COMPANIES : 1) ON THE BASIS OF INCORPORATION : a) Chartered companies . 50) Pvt Ltd. b) Statutory companies c) Registered companies. EX. c) Registered companies : This type of companies are formed under Companies Act 1956 and are where common types of companies found in India.c. RBI & SBI e. EXPLANATION : 1) ON THE BASIS OF INCORPORATION : a) Chartered companies : Those companies which are incorporated under a special charter granted by king or queen ( in England) EX. b) Statutory companies : Created by a special ACT of the legislature. .t. The East India company or The bank of England . c) Unlimited companies : Sec 12 Specifically provides that those companies in which the liability of share holders is unlimited as in partnership firms is called unlimited companies. . 2) ON THE BASIS OF LIABILITY : a) Companies limited by shares : In this type of companies member is not liable to pay anything more than the fixed value of the share. what ever may be the liabilities of the company . b) Companies limited by guarantee : In these companies members promises to pay a fixed some of money in the event of liquidation of the company. This amount is called the Guarantee ( or shares & Guarantee). . In other words. a public company means a company which by its article (i) Does not restrict the right to transfer of the shares if any. and (iii) Does not prohibit any invitation to the public. (ii) Does not limit the number of members . 3) ON THE BASIS OF NUMBER OF MEMBERS : a) Private company : A private company is one which buy its articles i) Restricts the right of the members to transfer the shares. ii) Limits the number of its members ( not counting its employees) to 50. if any. b) Public company :[sec 3 (1) (iv)] all companies other than private companies are called Public companies. A PVT must have its own Article of association which contains the condition as laid down in [ sec(3) (1) (iii)]. iii) Prohibits any invitations to the public to subscribe for any shares or debentures of the company. [pub.co & 5 Pub. co) . Distinction between a public company and private company : the major differences are a) Minimum and maximum number of members. d) Transferability of shares.co. e) Invitation to subscribe for shares.co under taking for qualification shares. b) Number of directors.co. f) Special privileges : only for Pvt. pvt . h) Managerial remuneration : cannot exceed 11% of net profit. c) Restriction on appointment of directors. (pub. [pub. co min 3. g) Quorum for meeting : min 2 Pvt.co 2]. Where its average annual turn over during the last 3 consecutive financial year is R.. When a pvt.co [no.co holds at least 25% of share capital of a pub. accepts. co becomes pub. renews deposits from the public. Where the pvt. .co. When does a private company becomes a public company ? Where a default is made by pvt. of members. co it must inform the Registrar within 3 months from the date of conversion .co invites.] Where at least 25% of its paid up share capital is held by one or more of the body corporate. Where a pvt.s 10 corers or more. ON THE BASIS OF CONTROL: a) Holding company: Sec.4(4)a company is deemed to be subsidiary of another Co.4.(4) a Co is “deemed to be the holding Co. of another if but only if that other is its subsidiary” ( >50% or control BoD) b) Subsidiary Company: Sec. ii) Holding of majority shares. iii) Subsidiary of another subsidiary. in the following cases: i) Controlling the composition of BoD. 3. . D) One-Man Company: . b) Unregistered Company: C) Foreign Company: A company incorporated out side India. e. State Trading Corporation( STC).g.ON THE BASIS OF OWNERSHIP: a) Government Company: 51% capital held by state or central govt. 5. 3. Incorporation (Registration) Stage. FORMATION OF A COMPANY: Promotion of company refers to stages of formation of a company. Raising of Share Capital Stage: . 2. They are 1. 4.Selection of Name.Promotion Stage. ” or Pvt. (“Ltd. . Detailed investigation. Explanation: 1) Promotion Stage: This includes Discovery of business opportunities. The name should not be similar to the existing. Ltd). Assembling Necessary Requirements: Financing the proposition: 2) Selection of Name: to be identified for legal and business purposes. B) Applying to the stock exchange for listing of shares. 3) Incorporation Stage: A company is said to be incorporated when it fulfill the formalities of registration and obtain “Certificate of Incorporation". A) entering onto agreement with underwriters. should raise the required capital and obtain “ Certificate of Commencement of Business. C) Issue of prospectus inviting public to subscribe Allotting shares. By submitting the MoA .” 4) Raising the Capital: Which includes following steps. A public to commence business. AoA and written consent of all the directors. . Remuneration to promoters: If personal skills are involved in promotion. PROMOTERS OF A COMPANY: A promoter is one “ who undertake a to form a company with reference to a given object and to set it going who takes the necessary steps to accomplish that purpose” Liability of promoters: Liable to hand over any secret profit and any personal interest in dealings. Liable to untrue statement in the prospectus. . The Memorandum of Association (MoA) The MoA is a document which contains the Fundamental Rules regarding the constitution and activities of the company. It is the charter of the company defines its raison d’etre( reason for existence). It lays down the area of operation of the company. It also regulates the External Affairs of the company. CONTENT OF MoA :Sec.13. 1)The name clause: The name of the company. 2)The Register Office Clause: The name of the state.. 3)The Object Clause: The Object of the company. 4) The capital Clause: The Registered/ Authorized /Nominal Capital. 5) The Liability Clause: The nature of liability of the members. 6) The Association Clause: Names , addresses and description of the subscribers and the number of shares taken by each of them. The MoA must be signed by at least seven subscribers in the case of Public Company and Two in the case of Private company. Doctrine of Ultra-Vires (Beyond the Powers): The company exists only for the purposes stated in its MoA and any act done outside the expressed or implied powers is Ultra-Vires and therefore null and void. Ashbury Railway Company Vs Riche. Object of co. sell and lend railway carriages. Lease mines and building. Entered contract with Riche for financing Construction of railway line in Belgium. The contract is not binding on railway co. as it is Ultra-vires the MoA. irregularly done . . 3.shareholders can validate it .Exceptions To (DoUV) : 1. The companies right over property is protected by ultra-vires act. 2. If an act is within the powers of the company. If an act is ultra-vires the powers of the directors. is expected to have knowledge of the power and position of the company and its directors. DOCTRINE OF INDOOR MANAGEMENT (DIM): Is exception to the “DCN.” . “ This rule is popularly called as DCN. Doctrine of Constructive Notice (DCN): “Any person who enters into contract with a company. He is entitled to presume that the internal management of the company is regular. and he is presumed to have gone through its MoA and AoA. This is known as DIM or “TURGUAND’S RULE.” The outsider cannot be expected to know the internal affairs of the company or to inquire into the irregularities of the company’s internal affairs. 2. under DIM. was given by “Lord Hatherly” in the Exceptions to DIM: 1. Knowledge of Irregularity.e. DIM Rule case “ROYAL BRITISH BANK Vs TURGUAND” Case: Director issued Bond to Turguand without passing any resolution. Bond rejected on the ground of DCN. Turguand filled a case against bank and pleaded not knowing irregularities of management. Negligence of outsider: Forgery of document: Acts outside the Apparent Authority: No Knowledge of the Content of the MoA and AoA . Judgment: Turguand can sue the bond (valid) presumed as resolution passed i. 6. Transfer and Forfeiture of shares. delegation of authority e.t. ARTICLE OF ASSOCIATION (AoA): The AoA contains regulations regarding all matters concerning the internal affairs of the company.c . CONTENT OF AoA: 1. Issue. Methods to increase or decrease capital. Matters relating to appointment. 3. powers duties. 4. Terms of appointment . Voting rights of members and rules regarding methods of voting. 2. qualification and remuneration of directors. Procedure of holding and conducting the various company meetings. 5.of secretary or .remuneration. Division of share capital of the company and rules regarding allotment. Procedure of winding up of a company. addresses etc. 10) Methods of securing loans. 9) Rules relating to accounts. 8) Declaration of dividend and rules regarding its payment. Resolution. divided into paragraphs and serially numbered. audit charging of depreciation and creation of reserves etc. Alteration of AoA: By Passing a Spl. And all the subscribers who has put their signature on the MoA are required to put their signature . 11) Rules regarding common seal of the company. . 7) Rules relating to issue of share capital. AoA should be printed . . or debentures of the company. Voting rights Dividend . where the company doesn’t invite public subscription. 3) Consent of Central Govt. PROSPECTUS Prospectus means any document described or issued as a prospectus inviting deposits from public or inviting offer from public for the subscription or purchase of any shares in. 2) Name and register office of the company. for the present issue or compliance with the with the SEBI guidelines. “Certificate in Lieu of Prospectus” is issued by a public co. ESSENTIAL CONTENT OF THE PROSPECTUS: 1) Date of issue of prospectus.expenses on issue etc. subscription not received. 8) Date of opening and closing of issues. 6) Refund of issue if 90% min.Directors names addresses… 15) Restriction on transfer and transmission of shares.& Risk Factors. . 7) Issue of allotment letter or refund within 10 weeks with interest. size of present issue .paid up capital… 13) Terms and particulars of the issue.) 11) Terms of Underwriting.4) Name of the stock exchange. 14) Promoters . 9) Names and addresses of lead managers. 10) Credit rating from CRISIL (The Credit Rating Information Services of India Limited. 5) Punishment for fictitious application. 12) Capital Structure of the company. i) Every person who is the director of the company at the time of issue of prospectus. iii) Every person who is a promoter of the co. iv) Every person who has authorised the issue of prospectus. a) A statement which is misleading in the form & context in which it is included. . & b) An omission ( of any matter) which is calculated to mislead. PERSONS LIABLE FOR UNTRUE STATEMENTS IN THE PROSPECTUS: sec 62 (i). ii) Every person who has authorised himself to be named. LIABILITY FOR MIS-STATEMENT IN THE PROSPECTUS: Sec 65 of the companies act lays down that the term “Un true statement” in connection with a prospectus shall be deemed to include. & ii) Criminal liability.000 or with both.” Defense against the civil and criminal liability. shall be punishable with imprisonment which may extend to two years or with fine which may extend to Rs. The liabilities for untrue statement: The companies act imposes a two fold liability on the persons responsible for untrue statement in the prospectus. .5. i) civil liability : sec 62 (i) “Such persons are liable to pay compensation for any loss or damage which any person may suffer from the purchase of any share or debenture on the basis of untrue statement.” ii) Criminal liability : sec 63 (i) “every person who has authorised the issue of prospectus containing untrue statement. i) Civil liability. 2) Issued Capital : Offered to public. Transfer of Shares: by delivery and endorsement. Transmission of Shares: means transfer of property or title in share by law. 3) Subscribed Capital: Taken up by public. Transfer of shares from deceased member to his legal representative or in case of bankruptcy to his Official Receiver. SHARE CAPITAL Various categories of share capital are: 1) Nominal or Authorized Capital: max capital. 4) Called up Capital: amount collected by share holders. . 5) Paid up Capital : Paid up by shareholders. Share certificate Vs Share warrant. b) Deferred Ordinary Shares: 3) Founders or Management Shares: 4) Co. . d) Participating and Non participating.CLASSIFICATION OF SHARES: 1) Preference Shares :again divided into a) Cumulative and Non cumulative.( in surplus profit ) 2) Equity or Ordinary Shares: a) Preferred Ordinary Shares: preference for Dividend & capital repayment.Partnership Shares: to employees.( return back ) c) Convertible and Non convertible. b) Redeemable and Non redeemable. By getting allotment of shares. How is membership created : By signing the MOA. By mortgage of shares & By winding up. By sale. By transfer. How membership is terminated : By death. And whose name is entered in its register of members. ii) every other person who has agrees to become a member of a co. By forfeiture of shares. By insolvency. By obtaining shares in inheritance. By allowing his name to remain in the register of members . By surrender. MEMBERSHIP OF A COMPANY : Member sec 45: “The term member of a company means i) The subscribers of MOA of co. By rescission of the contract. . Dividend paid only to Registered share holders only. Transfer to Reserve Fund up to 10% of profit. DIVIDEND POLICY : “Dividend is a part of a profit which is paid to the share holders of a company” Rules and regulations Regarding Payment of Dividend: Sec. a/c of Central govt. 8. 94 and 205 t0 207. Penalty : if dividend not declared within 42 days. In proportion to paid up capital 4. Unpaid Dividend Account: Transfer to gen. 7. 5. 9. Dividend becomes debt from the date of declaration.Payment of Interim dividend. Dividend paid in cash only. 1. . 6.BoD decision is final in payment of dividend (of Profit) 2. 3. if unpaid. stock. 3) Secured Debentures. Bonds and other securities of the company whether constituting a charge on the assets of the company or not. DEBENTURE Debentures Vs Shares : . includes debenture. 5) Redeemable Debentures. Kinds of Debentures: 1) Bearer or Unregistered Debentures. 7) Convertible and Non convertible debentures. 6) Irredeemable Debentures. 2) Registered Debentures. 4) Unsecured debentures. ii) Extraordinary General Meetings : 2. Meeting of Directors. Meetings of Creditors and Debenture Holders : 4.Meeting of Shareholders: These may be further divided into a) Statutory Meeting. RESOLUTIONS AND GENERAL MANAGEMENT: TYPES MEETINGS: The companies act provide for Four types of meetings: 1. . MEETINGS. b) General meetings: again divided into i) Annual General Meetings. Class Meetings : 3. Details about directors.. Statutory report contains details about fully and partly paid shares. at least 21 days before meeting.Meetings of Share holder a) STATUTORY MEETING: Sec. Statutory Report : drafted by directors and .” certified by at least two directors of which one is MD.1. Particulars of contracts. cash received Expenses of brokerage etc. hold a general meeting of members which is called the statutory meetings. Which is sent to every member of .165 “Every public company limited by shares and every company limited by guarantee and having a share capital must within in a period of not less than one month not more the six months from the date at which the company is entitled to commence business. Written Notice of 21 days to the members before meeting. Persons responsible for the default are liable to be fined up to Rs.166. General Meetings: General meeting of the company is called by the board of directors by giving short notice or 21 days if it is annual meeting. Registrar may extend the time holding other meetings. Next annual meeting within 12 months and shld not exceed 15 months. b). General meeting is called when ever is required.2500 for continuing default. i) The Annual General Meeting: (AGM) Sec. . Annual meeting should be called during business hours. provides First annual meeting within 18 months. 50000 and Rs. * The requisition must be deposited at the register office of the company.45 days. The BoD can be compelled to hold a EGM upon request or requisition made for it under the following conditions. * The requisition for the meeting must mention matter for discussion. * The requisition must be signed by members holding at least 1/10th of the paid up capital or 1/10th of voting power. ii) Extraordinary General Meeting: (EGM) Any general meeting other than AGM is called EGM. It is called for transacting some urgent or special business which cannot be postponed till the next AGM.Meeting to be held from the date of requisition . 21 days-Notice . . 3) MEETINGS OF CREDITORS OF DEBENTURE HOLDERS : This type of meetings or held during the life time of company & the winding up of company. b) Notice of the meeting must be given to the directors and quorum will be 1/3rd of the total strength or two directors. which ever is higher. c) Lack of quorum will lead to adjournment of the meeting. a) Directors must hold at least 4 meetings in a year. at least once in every 3 months. 2) CLASS MEETINGS : Class meetings of share holders holding different class of shares. 4) MEETINGS OF DIRECTORS : The companies act contains the following provisions relating to board meetings. . 6) Method of voting : Show of hands are a Poll. members 5&2. RULES AND PROCEDURE REGARDING MEETINGS :The general rules of procedure as regard share holders meetings are as follows: 1) Notice. 5) Proxy : To attend and vote on behalf of member. 4) Chairman of the meeting : Elect a chairman. 3) The quorum for meeting : min. 2) Agenda : Ordinary and special business. The article of a company may provide that a member shall not exercise voting power in respect of a share on which a call or any other sum due to the company has not been paid. RESTRICTION ON VOTING POWERS :Sec. No other restrictions on voting rights can be imposed. where the dividend payable is in arrears. a preference share holder can vote only on questions affecting his interest.” .181&182 “An Equity share holders can vote on all resolutions. Special resolution is essential for the following i) To alter the memorandum. RESOLUTIONS : Resolutions of members in a company are of three types : 1) Special resolution : 2) Ordinary resolution : 3) Resolution requiring special notice. place.189(2) “ Special . iv) To pay interest out of capital. 1) Special Resolution : Sec. ii) To change the name of the company. iii) To alter the AoA. v) To Wind up a co. Resolution is a resolution which is passed by a majority of 3/4th of the members either by show of hands or by poll either in person or by proxy. Object. Alteration of Share capital. Appointment of auditors . Passing of annual account and B/S. Ordinary Resolution is required in the following i) For rectification of name.2) Ordinary Resolution: “ A resolution is Ordinary Resolution when at general meeting. the vote cast in favour of resolution are more than the votes cast against the resolution by members entitled to vote and voting. Directors and fixation of remuneration. . To issue the shares at discount. Voluntary winding up of co. 3. Minutes of Proceeding: Minute means a written summary of the proceedings a of a meeting. Resolution Requiring Special Notice: Sec.190. The notice be given at least 14 days before the meeting at which the resolution is to be moved. Resolution requires a special notice of the intention to move the resolution has to be given to the company. resolutions passed and opinion of chairmen. . ii) Removal of directors. A special notice is required in the following i) Appointment of auditors. Contains summary of the meetings names of members present. iii) appointment of directors in place of one who is removed. . iii)The prior permission or prior sanction by central govt. Payment of Interest out of Capital:Sec208. A company cannot pay interest out of capital. except in the following cases i) Where any shares in a co. ii) Authorized by AoA. which cannot be made profitable for a lengthy period. are issued for the purpose of raising money to defray the expenses of construction of any work/ building or the provision of any plant . governs. manages or superintends the policy and affairs of a co. DIRECTORS Definition. A director may. by whatever name called. by whatever name called”. be described as an individual who guides . therefore. Sec.2(13) “ any person who is occupying the position of the director. . directs . is accustomed to act shall be deemed to be director of the co. Sec303 “ any person in accordance with whose direction and instructions the BoD of a co. F) By the rule of proportional representation.” . Appointment of Directors: By following ways A) By AoA by first directors. E) By the central government. C) By board of directors. NUMBER OF DIRECTORSHIP: According to sec 227 “A person cannot hold the office at the same time as a director in more than fifteen companies. D) By debenture holders & other creditors. B) By the company in general meeting. } DISQUALIFICATION OF DIRECTORS: sec 274 Person of unsound mind. d) The bearer of share warrant shall not be deemed holder of shares for the purpose of qualification shares. Convict. a) director shall be deemed to be qualified if he secures the qualification shares with in two months after his appointment. Un discharged insolvent. c) Every director not being a tech. director appointed by the central or state government must file a statement of share qualification. { Public co. b) The nominal value of qualification share or shares shall not exceed Rs 5000. Those who has not paid any calls in respect of shares or Ordered by court. . SHARE QUALIFICATION: SEC 270. To issue debentures. Shall be persons whose period of office is liable to terminate by rotation.. To make loans. ii) The companies Act. RETIREMENT OF DIRECTORS :sec 255 provides that not less than 2/3rd of the total number of director of a public company or a private company which is a subsidiary of a pub co. TO invest the funds of the company. . Sec 292 powers of directors are : Powers to make calls on share holders. POWERS OF DIRECTORS : Normally derive their powers and authority from two sources i) By article of association . To borrow money otherwise than on debentures. Directors or a MD may be given compensation by the co. Entitle to receive remuneration fixed by AOA/Act. in case of premature termination of services. RIGHTS OF DIRECTORS : sec 318-321 Participate in the direction of the companies affairs. . Skill and Diligence: iii) Other Duties: a) To attend board meetings. b) He must not delegate his functions except to the extent authorized by the act. . ii) Duties of care . DUTIES OF DIRECTORS : sec 297. C) He must disclose his interest the BoD.299-302 i) Fiduciary duties: Directors must exercise their power honestly and in the interest of the co. and shareholders. d) For any misconduct. ii) Liability to the Company. c) For any breach of trust. ii) Liabilities to the company: a) Ultra-vires act b) Liability for negligence. . iii) Liability to the Breach of Statutory Duties: iv) Liability to the acts of his Co-directors. LIABILITIES OF DIRECTORS: The liabilities of directors may be discussed under four heads: i) Liabilities to Third Parties. Misstatement etc. d) utilization of material or labour or other costs. affairs. Inspection of Books of account: Annual Accounts and Balance sheet: Boards Report: co. ACCOUNTS AND AUDIT: Sec. dividend… Filing of accounts with the Registrar: within 30 days from the date of B/S and P&L A/C filing. .209. b) all sales and purchases of goods by the co. reserves.10. six months penalty or fine Rs. c) the assets and liabilities of the co.000 or both a) all sums of money received and expended. Every co at it register office shall keep books of account with respect to. AUDIT AND AUDITORS: Audit of the co. receive notice of general meeting and to receive remuneration. visit branch offices and access to books. Rights and powers of the Auditors : Right of Right to Right to Right to attend. . obtain information and Explanation. Auditors are the person who will examine the accounts maintained by the directors with a view to informing the shareholders of the true financial position of the co. Right to access to books of a/c and Vouchers. is intended for the protection of the shareholders. . The auditor report includes Loans and advances of co. DUTIES OF AUDITORS: Sec 227 1. Auditor’s Report: After examining the accounts of the co. Duty as watchdog. Auditor should report to the members of the company on the accounts examine by him. 3.The auditor must acquaint himself with the AoA and Companies Act. an auditor is required to make a report to the member of the company. Any shares allotted for cash. Proper books of a/c are maintained and other information. Assets of the co. Personal expenses. 2. b) Creditor’s Voluntary winding up. 3. This may be_ a) Member's Voluntary winding up. i.e. means the termination of the legal existence of a co. Modes or Methods of Winding Up There are three methods of winding up of a company. Winding Up of a Company : Winding up or liquidation of a co. 1. in the manner laid down in the Companies Act. collecting its assets and distributing the assets among creditors and shareholders. Compulsory Winding Up of Company by the court 2. . by stopping its business. Voluntary Winding Up. Winding up under the supervision of the court.. *By any Creditors. a) Special Resolution for the winding up. unable to pay its debt. Who can apply for winding up? *By the co. should be wound up.Explanation: Modes of winding up 1. * By a Contributory. Compulsory winding up of co. b) Default in holding Statutory meetings or in delivering Statutory Report. * By the Registrar. . g) If the court is of opinion that it is just and equitable that the co. d) Reduction in membership below statutory minimum. on following grounds. c) Failure to Commence Business within a year from the date of incorporation. f) If the co. a) By an Ordinary Resolution. ii) Creditor’s Voluntary Winding Up. Types of Voluntary Winding Up: Powers And Duties of Liquidators: Contributories: Is a person who is liable to contribute to the assets of the company in the event of winding up. . Voluntary Winding Up: means winding up by members themselves without the intervention of the court. The persons liable as contributories may be i) Present Members.2. i) Member’s Voluntary Winding Up. ii) Past Members & iii) Directors. (duration completed) b) By special resolution in other cases. Consequences of Winding Up : 1. V) Unsecured Creditors . Consequences as to Shareholders: Limited liability. 2. iii) Preferential Debts. Iv) Floating Charges. Consequences As to Creditors: The order of priority paying off debts in a winding up is i) Secured creditors ii) Cost and Charges of Winding. 3. The court may appoint a additional liquidator. 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