Company means An association of persons united for a common
object.
 A Company formed and registered
Companies Act or an existing Company.
under
• Incorporated Association
• Separate Legal Entity
• Limited Liability
• Separate Property
• Perpetual Succession
• Transferability of shares
• Common Seal
• Capacity to sue and be sued
Companies
Chartered
Incorporated
Unincorporated
Statutory
Registered
Companies
Limiter By
shares
Public
Companies
limited by
Guarantee
Private
Public
Unlimited
Companies
Private
Public
Private
Public Company
Private Company
Min. Members
7
2
Max. Members
No limit
50
Restriction on Name
Limited
Pvt Limited
Commencement of
Business
After certificate of commencement
of Business
After Incorporation
Invitation to Public
Yes
No
Transferability of Shares
Free
Not Free
Issue of Share Warrants
Yes
No
No of Directors
Min 3
Min 2
Statutory Meetings
Must
No Compulsion
Quorum
5
2
FORMATION OF COMPANY
 Promotion
 Incorporation
 Availability of Name
 Minimum paid up Capital
 Documents to be filed with registrar
 Certification of Incorporation
 Floatation or Raising of Capital
 Commencement of Business
Memorandum of Association
 Is the foundation on which the structure of the company is
based.
 It contains the fundamental conditions upon which alone
the company is allowed to be incorporated
 Its five clauses provide the basic features of the company’s
constitution.
 A company cannot depart from the provisions contained in
its Memorandum, however great the necessity maybe.
Purpose
 Intending
shareholder can find out from the
memorandum the field in, or the purpose for which the
money is going to be used by the company and what
risk is he taking in making the investment.
 Any one dealing with the company shall know whether
the contractual relation into which he is entering with
the company is one relating to a matter within its
corporate objects.
Clauses
 Name Clause
 Registered office Clause
 Object Clause
 Liability Clause
 Capital Clause
DOCTORINE OF ULTRA VIRES
 ‘Ultra’ means beyond, ‘Vires’ means power.
 Any activity not authorised by the memorandum
is ultra vires the memorandum.
Consequences of Ultra Vires
 Injuction
 Breach of warranty of authority
 Personal Liability of Directors
 Ultra Vires Contracts
Articles of Association
 The articles of association are the rules and
regulations of a company framed for the purpose of
management of its internal affairs.
 It defines the powers of its officers.
The Articles usually contain following matters
 Number and value of shares
 Allotment of shares
 Calls on shares
 Forfeiture of shares
 Borrowing powers
 Directors, their appointment etc.
 Meetings
 Voting Rights etc