When a promoter decides to form a company; first legal step is reservation of a name for the company.
We have discussed recently, the name of the company should not constitute an offence under any law for the time being in force or is undesirable in the opinion of the Central Government.
After promoters and subscriber to memorandum of a proposed company proposed directors are most important persons for a proposed company. Once, a promoter selects proposed first directors of a company, first legal step is to check whether they have a director identification number. Incorporation documentation asks to disclose name of proposed first directors of a company.
We have already discussed the law related to Director Identification Number in an earlier post here. However, we still need to understand some legal procedures as mentioned in the relevant Rules also.
Every individual intending to be appointed as director of a company shall make an application for allotment for Director Identification Number (DIN) to the Central government. [Section 153]
This application shall be made electronically in Form DIR -3 of the Companies (Appointment and Qualification of Directors) Rules 2014. [Rule 9]
A dream company comes into existence with a good planning and efforts. If character of a human start building with thinking of its parents; character of a company start building with thinking of its promoter.
I have nothing to say about all business decision like business objects, size of investment, geography of operations and members of its core management team. I will discuss some points with corporate law angle. However the object must be defined and lawful. It is good if, this is reduced in writing with help of an industry expert with a vetting by a Company Secretary.
We always have our perceptions without considering facts. We reject facts which do not support our predetermined thought. Reading opposite ideas and facts always help. Read this word by word, it hurt you…
Received via Shankar Gopalakrishnan
As the 2014 elections begin, the time has come again to state the obvious. In the context of massive propaganda campaigns, the subtle use of stereotypes, and the fact that both the Western and the Indian media share certain basic biases, many people end up believing in a range of myths about the adherents of the world’s second largest religion. This is a quick attempt at exposing those myths.
The world’s largest Muslim majority country is Indonesia (total population approximately 25 crores, larger than Pakistan). Indonesia is a secular democracy. Indeed, its population is almost a mirror image of India’s – 88% Muslim, 9% Christian, 3% Hindu, 2% Buddhist, etc. (as compared to India, which has a population that is 80% Hindu, 13.4% Muslim, 2.3%…
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Before discussing the circular, I will check definition of financial year in the Companies Act 1956. The clause (17) of section 2 of the Act define “financial year means, in relation to any body corporate, the period in respect of which any profit and loss account of the body corporate laid before it in annual general meeting is made up, whether that period is a year or not.”
This blog supports any candidate or political party which may work for Law, Governance, Responsibility, Transparency and Competition in all sphere of life; social, economic and political.
This blog supports diversified Parliament to represent all voices from all over India without talking about any stability.
Vote even if it is for ‘None of the above’ (NOTA).
What is first legal requirement for formation of a company? This is willingness to form a company. Who should have this willingness? The promoter! Who will be the promoter? Any person, natural or legal! However, in case of One Person Company only a natural person can incorporate a company. Even in case a legal person, a natural person shall digitally and manually sign the incorporation forms and documents.
This is needless to say even a form for reservation of a name for proposed company need a digital signature among other requirements.
Clause (62) of the Companies Act 2013 defines “One Person Company” means a company which has only one person as a member. According to clause (68) of this section as well as Clause (c) of Sub- section (1) of Section 3; one person company is a private company.
Rule 3 of the Companies (Incorporation) Rules, 2014 say only a natural person shall be eligible to incorporate one person company. Such one person shall be Indian citizen and a resident of India. A non – resident Indian or a Foreign Citizen resident in India may not incorporate a one person company. Same rules are applicable to nominee of the sole member of a one person company.
Name Availability for Indian companies shall be governed by Rule 8 of the Companies (Incorporation) Rules 2014 under the authority of the Companies Act, 2013.
Determine Identical Names:
The rules firstly say that before granting any name, it will be examined whether name is identical with name of any other company/LLP or any other name already allowed to a company/LLP.
Dear Stakeholders of Corporate India,
As a most vibrant corporate community of the world, you are aware or recent unwelcome development related to corporate India like Satyam, Sahara and Saradha. These developments raised strong concern among us and Parliament of India as well. This reflects in core principles of the Companies Act, 2013. India has some of the best corporate governance and social responsibility norms in the world.
The Companies (Specification of definitions details) Rule, 2014 defines some additional terms which have not be defined in the Act. These rules clarify two terms already defined in the Act but need executive clarification as the Act.
Institute of Company Secretaries of India has mailed an “appeal” to its members and student on 1st April 2014. This was not an April Fool Prank. This letter is in public domain and is a public document.
In following paragraph, we will discuss this “appeal”:
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What is benefit of incorporating of a company? One of most important benefit of incorporation is limiting risk of liability.
In case of traditional form of businesses; proprietor, partnership or family businesses; there is no concept of limited liability. An owner or part – owner is responsible to pay all business debt even from its own pocket. We always know, business money (galla) is different from personal money. But, owner of a business remains in risk of liabilities towards creditors and government personally.
The Institute of Company Secretaries of India has announces an integrated Company Secretaryship Course – Full Time on its web – site Recently. Readers may find details at the following link:
https://www.icsi.edu/portals/0/INTEGRATED_COMPANY_SECRETARYSHIP_COURSE_FULL_TIME.pdf
1. What is this integrated Company secretaryship course – Full time?
2. Was any response invited from stakeholders particularly from members?
3. Is it meant to create a class of full time students against present part – time students?
4. What measure have been taken to ensure that Industry will take all company secretaries as equal irrespective of course chosen – Full time or part time?
5. Why is there only one year training period there for these students against two years for general part time students? Is not it meant creating a separate class among students itself?
Readers may leave comments in the Comment section here under.
What is significant of word “limited” in name of a business organization?
In rural and semi urban India, this is a majority opinion that risk of a person dealing with is limited. Such persons may be petty investors, public depositors, unemployed youth, farmer, retired citizens, daily wagers and all potential victims of corporate criminals. I have met many persons, who support this limited risk perception. I have no idea about source of such wrong information.
Association for Democratic Reforms and another vs. Union of India
and others is a very important decision not only because it came at the eve of Indian General Elections, not only because two powerful parties Indian National Congress and Bhartiya Janata Party are accused; but also because it comes on the eve of Indian transition on companies law. The decision is a result of a writ Petition and we can find original decision here. Before going to the decision, I refer relevant legal provisions here.
Posted in Chapter XII - CA2013, Companies Act 2013, CorpGov, Governance and Responsibility, Truth of Our Time
Tagged Bhartiya Janata Party, BJP, Companies Act 1956, Companies Act 2013, Foreign Companies, Foreign Contribution Regulation Act 1973, Foreign source, INC, Indian National Congress, Sesa, Sterlite, Vedanta Inc
Here, we will discuss provisions related to Official Liquidator.
APPOINTMENT OF OFFICIAL LIQUIDATOR (SECTION 359)
For the purposes of this Act, so far as it relates to the winding up of companies by the Tribunal, the Central Government may appoint as many Official Liquidators, Joint, Deputy or Assistant Official Liquidators as it may consider necessary to discharge the functions of the Official Liquidator.
Section 180 of the Companies Act, 2013 restricts powers of the Board of Directors to certain extent. The Board of Directors may exercise particular powers only with the consent of the company given by way of special resolution passed in general meeting of the company.
The ministry of Corporate Affairs has notified additional provisions of the Companies Act, 2014 to be effective form 1st April 2014.
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