1 C2 Flashcards
What are the company types based on incorporation? 👶
Chartered Companies -Setup by a charter given by a king / queen. E.g. East India Company in 1600.
Statutory Companies - Setup by special acts of Parliament or State legislature. E.g. RBI, LIC, SBI.
Registered Companies - Registered under the Companies Act, 1956 (and later 2013) e.g. Tata Motors, Infosys
What are Company types based on number of members? 🏙🤵
Private Ltd Company
Public Limited Company (Companies Act 2013)
Private Ltd Company Members? can they invite public at large, to buy shares /bonds? Min. authorized capital Min. Paid up Capital Directors (Min-Max) Term limit Corporate Governance Norms
Min. 2 to Max. 200
Can’t
1 lakh. It’s the amount of shares the company can issue.
0. The amount of money a company has actually received from the selling of shares.
2-15
N/A
Norms either not applicable or relaxed.
Public Limited Company (Companies Act 2013) Members? can they invite public at large, to buy shares /bonds? Min. authorized capital Min. Paid up Capital Directors (Min-Max) Term limit Corporate Governance Norms
- Min. 7 to Max. unlimited number (depending on how many shares issued & purchased by the people)
-A public ltd. company can invite public at large, to subscribe to its shares and bonds.
If their shares are listed on a stock exchange (BSE, NSE etc), it’s a ‘Listed Public Limited Company’ (e.g. Reliance), else it’s an ‘Unlisted Public Limited Company’ (e.g. India Post Payment Bank : IPPB)
₹5 lakhs. It’s the amount of shares the company can issue.
₹0. The amount of money a company has actually received from the selling of shares.
Min 3 to Max 15. out of them one must be Indian Resident, 1 must be Woman and 1/3rd of the directors must be independent directors.
Independent directors are persons without any pecuniary interest in company, they are supposed to protect minority shareholders’ interests.
Their directors have age limit, term limit.
Companies Act requires them
to hold specific number of annual meetings of board
of directors, norms for quorum, mechanism for e-
voting,
have to appoint Company Secretary,
Implement mechanism for protecting whistleblowers And so on…
What are Company types based on Ownership?
Government / Public Sector - When Government owns 51%/> shares. Examples: Steel Authority of India (SAIL), India Post Payment Bank (IPPB)
i) Holding Company - A company that owns majority shares in another company. E.g. Tata Sons ltd. holds majority shares of Tata Consultancy Services (TSC), Tata Steel, Tata Sky etc.
Private Sector- When private parties own 51%>. E.g.
Reliance, Tata, Adani
i) Subsidiary Company - A company that is controlled by a parent holding company. E.g TCS, Tata Steel, Tata Sky are subsidiary co of Tata Sons.
What are One Person Company, Not for Profit Company, Dormant Companies under the Companies Act?
- One Person Company: special type of private ltd company having only one member.
- Not for Profit Company: e.g.GSTN, NPCi etc. their profit is re- invested in business expansion. They get certain tax benefits & relief in how frequently they’ve to submit data to MCA.
- Dormant Companies: A) setup to start business in future B) setup to store intellectual property C) not filled annual returns for two consecutive years.
Under LLP Act 2008, what is Limited Liability Partnership (LLP)?
- Limited Liability Partnership (LLP) Company is formed by minimum 2 or more partners.
- Individual partners are shielded from joint liability created by another partner’s wrongful business decisions or misconduct. E.g. Vajiram and Ravi IAS Study Centre LLP
- LLP’s registration fees, auditing/reporting norms, tax liabilities, winding up process etc. are more flexible than a (public or pvt) ltd. company registered under Companies Act.
What is a company under Indian Partnership Act 1932?
A Partnership firm is formed by minimum 2 or more partners.
- Each partner is liable jointly with all the other partners for losses, wrongful biz. decisions and misconduct.
What are the Corporate Governance steps for LLP companies in 2020?
Corporate Governance → LLP settlement Scheme 2020
Limited Liability Partnership (LLP) companies are required to submit accounts and ownership related documents to the Ministry of Corporate Affairs.
But many of them did not submit the documents on the deadline, and the Government ordered them to pay late fees/penalties, threatened them with prosecuting cases
under the LLP Act and cancelling their registration.
LLP settlement Scheme, 2020: “If you submit the required documents between x to y date → Then you will have to pay less penalty and we will give you immunity from prosecution.”, said the Government.
What is Competition Commission of India and its use?
it is a STATUTORY BODY IN MINISTRY OF CORPORATE AFFAIRS
Competition among companies= consumer gets goods and services at the most competitive / affordable prices.
Therefore, government must prevent cartelization (price fixing or production fixing by a group of Companies), prevent monopoly (single company commanding the production / supply), protect consumers’ interests and ensure freedom of trade.
1970: Monopolies and Restrictive Trade Practices (MRTP) Act. Later replaced with Competition Act, 2002- which has a statutory regulator Competition Commission of India (CCI: 1 Chairman + 6 Members)
What is Insolvency and Bankruptcy Board of India (IBBI)?
This too is a statutory body under the Ministry of Corporate Affairs (MCA)
Read B2 I&BC
What are the Statutory Bodies under Companies Act 2013?
National Company Law Tribunal (NCLT)
National Financial Reporting Authority (NFRA)
Investor Education & Protection Fund
Serious Fraud Investigation Office (SFIO)
National Company Law Tribunal (NCLT)
Members?
Appeal
what Cases does it hear
Judicial + technical. They’ve benches @Delhi, Kolkata, Jaipur etc.
NCLAT (Appellate tribunal)
Hear the cases related to Companies Act, Board room battles, Merger- Acquisition, Corporate Insolvency & Bankruptcy (I&B)
National Financial Reporting Authority (NFRA)
Appeal
cases they hear?
NFRAA (Appellate Authority)
Sets standards for Auditors & (CA), in listed companies and large unlisted companies. If malpractices-> investigate and debar them, Powers of civil court.
Investor Education & Protection Fund
Members?
Appeal
what Cases does it hear
Boss: Corp. Affairs Secretary (IAS).
Plus, members from RBI, SEBI, financial experts
Regular Courts
They use unclaimed money from shares/bonds for financial literacy and awareness
