existing companies indian contract act

8/2/2019 Existing Companies Indian Contract Act

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ANPRESENTATION

ONEXISTING COMPANIES UNDER THE

INDIAN COMPANIES ACT1956

SUBMITTED TO:ASST.PROF. MS. L. RONGMEI

CP-302,BUSINESS LAWASSAM UNIVERSITY

SUBMITTED BY:DEEPJAY MAZUMDER

MBA-3RD SEM,ROLL-54


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The Companies Act, 1956:(1)This Act may be called the Companies Act, 1956.(2) It shall come into force on such date as the Central

Government may, by notification in the Official

Gazette, appoint.(3) It extends to the whole of India.**[Provided that it shall apply to the State of Nagaland

subject to such modifications, if any, as the CentralGovernment may, by notification in the OfficialGazette, specify.]


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The Companies Act, 1956, 1.Came into force on 1-4-1956 vide S.R.O. 612, dated 8th March,

1956, published in the Gazette of India, Extra. 1956, Pt.II, sec. 3, p.473.

2. Subs. by Act 62 of 1956, sec. 2 and Sch., for sub-section (3)

(w.e.f. 1-11-1956). 3. First proviso omitted by Act 25 of 1968, sec. 2 and Sch. (w.e.f.

15-8-1968). 4. Ins. by Act 31 of 1965, sec. 2 (w.e.f. 15-10-1965). 5. The word "further" omitted by Act 25 of 1968, sec. 2 and Sch.

(w.e.f. 15-8-1968)


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EXISTING COMPANIES UNDER THE COMPANIES

ACT,1956: Definitions of "Company", "Existing Company", "Private

Company" and "Public Company": (1) In this Act, unless the context otherwise requires, the

expressions "company","existing company", "private company"

and "public company" shall, subject to the provisions ofsubsection (2), have the meanings specified below(i) "company" means a company formed and registered under thisAct or an existing company as defined in clause (ii);

(ii)"existing company" means a company formed and registeredunder any of the previous companies laws specified below


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(a) Any Act or Acts relating to companies in force before theIndian Companies Act, 1866 (10 of 1866.)and repealed bythat Act;

(b) The Indian Companies Act, 1866 (10 of 1866);(c)The Indian Companies Act, 1882 (6 of 1882);(d)The Indian Companies Act, 1913 (7 of 1913);

(e)The Registration of Transferred Companies Ordinance, 1942 (54 of 1942); and

2[(f)Any law corresponding to any of the Acts or the Ordinanceaforesaid and in force

(1) In the merged territories or in a Part B State (other than

the State of Jammu and Kashmir), or any part thereof,before the extension thereto of the Indian Companies Act,1913 (7 of 1913); or


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(2) In the State of Jammu and Kashmir, or any

part thereof, before the commencement of

the Jammu and Kashmir (Extension of Laws)

Act, 1956 (62 of 1956). 1[in so far as banking,

insurance and financial corporations are

concerned, and before the commencement

of the Central Laws (Extension to Jammu andKashmir) Act, 1968 (25 of 1968) in so far as

other corporations are concerned];]


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Statutory provisions: Section 25 empowers the Central Government to

issue a licence to a company which is proposed to beincorporated provided it complies with conditions, asto its objects, application of its profits/income and

distribution of its profits, enumerated as under: - (i) it is being formed for promotion of commerce, art,

science, religion, charity or any other useful object; (ii) it intends to apply its profits or other income in

promotion of its objects; (iii) it intends to prohibit paymentof dividend to its

members.


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Any other useful object The presence of words `any other useful object in Section 25

leads to an inference that a company which is promoted for anyuseful object other than those specified in Licenced CompaniesUnder Section 25 of Companies Act, 1956.An association having

objects to promote commerce, art, science, religion, charity or anyother useful purpose and not having any profit motive can beregistered as nonprofit company under section 25 of theCompanies Act, 1956. This section empowers the CentralGovernment to grant a licence directing that such an associationmay be registered as a company with limited liability, without the

addition of the words `Limited or `Private Limited to its nameLAW the section namely, promotion of commerce, art, science,religion or charity shall also be eligible for grant of licence underthe section.


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The Non-profit or `No Profit -No Loss: The companies registered under section 25 of the Act

are also known as `Non-Profit or `No Profit No Losscompanies. These terms are often given literalmeaning that such companies cannot earn any

profits. Assigning such a meaning leads to unrealisticand impractical situations, as it would be impossibleto maintain a situation of no profit and no loss. Thewords `Non-Profit or `No Profit - No Loss essentiallysignify that such companies cannot distribute the

profits earned in the form of dividends to itsmembers and the income/profit earned has to beapplied for furtherance of the objects for which it hasbeen formed.


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Exemptions & privileges on grant of

licence: Once a license is granted, such companies can be formed

without the words `Limited or `Private Limited as part oftheir name. The existing companies can also take benefitof this provision and on grant of licence by the CentralGovernment, can proceed to change its name by omittingthe words `Limited or `Private Limited from its name. Inaddition to the privilege as to non-inclusion of the words`Limited or `Private Limited in its name, such companiesenjoy numerous exemptions under the Act. Section 263Aprovides protection to section 25 companies from the

applicability of provisions of sections 177, 255, 256 & 263of the Act, if the articles of such a company provide forelection by ballot of all its directors at each AnnualGeneral Meeting.


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Lower registration fee & exemption

from stamping Another privilege, which such a company enjoys,

is that though such a company can have sharecapital like any other company but theregistration fees payable is lower as compared

to companies not having a licence under section25. The fee payable is fixed irrespective of theamount of authorized share capital. Thecompanies registered under section 25 of the

Act enjoy another privilege as these companiesare not required to have their Memorandum &Articles of Association stamped under section 39of Indian Stamp Act, 1899.


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Non-application of Companies

Auditors Report Order 2003: Section 25 companies are exempt from the applicability of

Companies Auditors Report Order 2003 (CARO). CAROwas notified by the Central Government on 12.06.2003 tobe applicable for financial years ending on or after 1st July,2003. The Central Government vide its circular no.

32/2003 dated 10th November, 2003 has made itmandatory for financial years ending on or after 1stJanuary, 2004. For the financial years ending between 1stJuly, 2003 and 31st December, 2003, the CentralGovernment has advised all Registrar of Companies to

take a lenient view provided, however, either a report inCARO or earlier MAOCARO (Manufacturing and otherCompanies (Auditors Report) Order 1988), if applicable, isattached.


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THANK YOU

existing companies indian contract act

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