23Oct 2018 by Reese Bannister

4 Specific Provisions Regarding Government Companies – (Indian Companies Act, 1956)

Government
Specific Provisions Regarding Government Companies in Corporate Law are as follows:(1) The auditor of a government company is appointed or re-appointed by the Comptroller and Auditor General of India. The Comptroller and Auditor General of India has the power to direct the manner in which the company’s accounts are to be audited by the auditor and give such other instructions regarding any matter relating to the performance of his functions as such. ADVERTISEMENTS: He can also conduct a supplementary test audit of the company’s accounts by officers appointed by him. The auditor must submit a copy of his report to the Comptroller and Auditor General and such report, with his comments thereon, shall be placed before the annual general meeting of the company.(2) Where Central Government is a member of…
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23Oct 2018 by Reese Bannister

Meaning of Preliminary or Pre-incorporation Contracts Entered by the Promoters (Companies Act, 1956)

Law
Preliminary contracts are contracts entered into by the promoters on behalf of the company before its incorporation with third parties.It is usual for the promoters to enter into these contracts of purchases of assets on behalf of the company about to be formed but before it is actually formed. They generally enter into these contracts as agents or trustees of the company, which has not yet come into existence.Such contracts are legally not binding upon the company even after it comes into existence. The company can neither ratify those contracts nor sue the vendors on them after its incorporation because ratification requires existence of the principal at the time when the contract was entered into. Image Source: guerrillafreelancing.com Cases: ADVERTISEMENTS: (i) N & Co. entered into an agreement with one…
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23Oct 2018 by Reese Bannister

Useful Notes on the Meaning of “Illegal Association”–Indian Companies Act, 1956

Investment
Combination of persons for achievement of common objects is called an ‘association’. In order to protect public from the mischief of large trading associations, whose membership may go on constantly changing, section 11 provides for their compulsory registration.According to section 11 every association consisting of more than 10 persons in banking business and 20 in the case of any other business must either be registered as a company under the Companies Act or be formed according to the provisions of some other Indian Law. An association not so registered is an illegal association having no legal existence.An illegal association is an association of more than 20 persons (10 in case of banking business) which carries a business without being registered under any law. Image Source: pearlsofprofundity.files.wordpress.com ADVERTISEMENTS: An association will…
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23Oct 2018 by Reese Bannister

Powers of the Board of Directors of a Company as per the Indian Companies Act, 1956

Investment
All the powers that a company is vested with can be exercised by the board of directors of the company, subject to the applicable law.The powers of the directors can be exercised either in a board meeting by passing a resolution in the meeting itself or by circulation or by way of delegation to various committees constituted by the board or to the appropriate officials of the company. The powers of the board of directors under various provisions of the Indian Companies Act, 1956 may be grouped under four heads: I. Powers to be exercised by Resolutions Passed at Board’s Meeting: ADVERTISEMENTS: According to section 292, the following powers of the company can be exercised only by means of resolutions passed at the meeting of the Board:(a) The power to…
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23Oct 2018 by Reese Bannister

Top 7 Effects of Ultra-Vires Transactions (Indian Companies Act, 1956)

Investment
Following are the effects of ultra-vires transactions: 1. Injunction: Any member of the company can bring injunction against the company to restrain it from doing ultra-vires acts. 2. Personal Liability of Directors: The directors of the company are personally liable to make good those funds of the company which they have used for ultra-vires purposes. It is the duty of the directors of the company to employ funds and properties of the company for the purposes laid down in the memorandum of association of the company. 3. Contracts Void: ADVERTISEMENTS: Any contract which is ultra-vires the company, will be void and of no effect whatsoever. “An ultra vires contract being void ab initio cannot become intra vires by reason of estoppel, lapse of time, ratification, acquiescence or delay”.However, if the…
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23Oct 2018 by Reese Bannister

7 Important Requisites of a Valid General Meeting of a Company

Government
The following are the requisites for calling and conducting a valid general meeting: 1. Proper Authority: The authority to call a general meeting is the board of directors of the company. The notice of the meeting should be issued under their authority, granted at a duly constituted meeting of the board or passing a resolution by circulation. A single director has no power to convene a meeting. The secretary of the company has no authority to call a general meeting unless the Board resolves and authorises him to do so. Image Source: bluetext.com ADVERTISEMENTS: In case the meeting of the Board of directors itself is unlawful e.g. where rightful directors are prevented from attending the directors’ meeting, the decision taken by the Board at such meeting to call the general…
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23Oct 2018 by Reese Bannister

Provision for “Annual General Meeting” of a Company Under the Indian Companies Act 1956

Management
(1) Meaning and Purpose: Annual General Meeting is a regular meeting of the members of a company which is held annually. This meeting provides an opportunity to the members of the company to review working of the company and express their views on the management of the company. Image Source: interqualityproject.euThe purpose of calling the meeting is to transact the ordinary business of the company. The ordinary business consists of: ADVERTISEMENTS: (a) The passing of the annual accounts,(b) Declaration of dividends,(c) Election of directors in place of those who are retiring by rotation,(d) Appointment and fixation of the remuneration of auditors of the company. (2) Statutory requirement: ADVERTISEMENTS: It is a statutory requirement on every company to call and hold an annual general meeting every year. The first annual general…
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23Oct 2018 by Reese Bannister

8 Different Types of Preference Shares Issued by a Company

Essays
Preference shares, with reference to any company limited by shares, are those which carry two preferential rights over other classes of shares: (a) a preferential right in respect of a fixed dividend it may consist of a fixed amount or a fixed rate, (b) a preferential right as to repayment of capital in the case of winding up of the company in priority to other classes of shares. “Preference share capital” is the sum total of preference shares. [Sec. 85 (1)]Different types of Preference shares are as follows: 1. Cumulative Preference Shares: A cumulative preference share has a right to claim the fixed dividend of the current year out of the future profits. The dividend, in these shares, accumulates unless paid. The accumulated arrears of dividend are to be paid…
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23Oct 2018 by Reese Bannister

6 Important Medico Legal Aspects in India Related to Safety of Patients in a Hospital

Management
Important Medico legal Aspects Related to Safety of Patients in a Hospital are given below: 1. Protection of Rights of Patients: In India, unlike in many other countries, the rights of the patients have not yet been spelt out in a legal form. Even the level of awareness among public as well as health care professionals is low.However, the fundamental rights enshrined in the constitution and certain laws enacted from time to time, have spelt out the obligations of the health care providers towards patients and have, indirectly, conferred certain rights on the patients. ADVERTISEMENTS: Learning from the world wide movement and the emphasis by the JCAHO/JCI (USA) on the Rights of Patients in their Accreditation Standards, National Accreditation Board for Hospitals and Health Care Providers (NABH) (India) have also,…
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23Oct 2018 by Reese Bannister

4 Main Procedures for the Forfeiture of Shares in a Company (Indian Companies Act, 1956)

Essays
When a call remains unpaid and the time allowed for its payment has expired, the company may, subject to the provisions of the articles, forfeit those shares and the amount received thereon. The power to forfeit shares must be expressly given in the company’s articles. It cannot be implied.In order that the forfeiture of shares is valid, the procedure expressly prescribed by the articles must be strictly adhered to. The technicalities must be strictly complied with as even a little inaccuracy may be as fatal as the greatest one. Even the whole body of shareholders or creditors cannot ratify a defective forfeiture. ADVERTISEMENTS: The procedure to be followed for the forfeiture of shares is as follows: 1. In Accordance with the Articles of Association: Shares can be forfeited only in…
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