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CCORPORATEORPORATELLAWAW- I- I

COURSE OUTLINE

SEMESTERV

B.A.LL.B. (HONS.)SSESSIONESSION: J: JULYULYTOTONNOVEMBEROVEMBER20152015

IINTRODUCTIONNTRODUCTION

Corporate form of ownership is the most important form of ownership of

business in the contemporary times. Its signicance is due to many distinct

advantages it has over other forms of ownership of business. In order to regulate

various aspects of functioning of companies, the Company Act was enacted in the

year 195. It had been the lengthiest piece of legislation ever passed by the

Indian !arliament. "ut now we have an entire new piece of legislation in front of

us in the form of Companies Act #$1%. &o ma'e it more contemporary and

relevant to the present corporate regieme, regulators and other sta'eholders in

India were trying to ma'e few changes in the 195 Act. As a result of that, the

Companies "ill, #$$9 was introduced in the (o' )abha, one of the two *ouses of

!arliament of India, on % August #$$9. &his Companies "ill, #$$9 was referred to

the !arliamentary )tanding Committee on +inance, which submitted its report on

%1 August #$1$ and was withdrawn after the introduction of the Companies "ill,

#$11. &he Companies "ill, #$11 was also considered by the !arliamentary

)tanding Committee on +inance which submitted its report on # une #$1#.

)ubse-uently, the "ill was considered and approved by the (o' )abha on 1

/ecember #$1# as the Companies "ill, #$1# 0the "ill. &he "ill was then

considered and approved by the 2a3ya )abha too on August #$1%. It received

the !resident4s assent on #9 August #$1% and has now become the CompaniesAct, #$1%. &he changes in the #$1% Act have farreaching implications that are

set to signicantly change the manner in which corporates operate in India. &he

new Act is more concise, relevant and more responsive to the current scenario.

&he emphasis in this course is on the fundamental principles of law relating to

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*re-in"orporation "ontra"ts

MMODULEODULEIIIIII.. IINCORPORATIONNCORPORATIONOOFFAACCOMPANYOMPANY

A company is incorporated upon its registration. 2egistration confers manyadvantages on the company. "oth oA 0constitution of the company and AoA

0rules for internal functioning are necessary for getting a company registered.

oa contains the fundamental conditions upon which the company is allowed to

be incorporated. &he three common law doctrine protects the interest of di6erent

sta'eholders involved.

,emoran#m of Asso"iation

Do"trine of Ultra ires Arti"les of Asso"iations

Do"trine of Inoor ,anagement

Do"trine of Constr#"ti'e Noti"e

In"orporation an its "onse.#en"es on Corporate

Transa"tions

o Certi("ate of In"orporation

o Certi("ate of Commen"ement

MMODULEODULEIVIV.. PPROSPECTUSROSPECTUS

A company is bound to raise nances for its sustenance and growth.

&herefore, in nance a prospectus is a disclosure document that describes a

nancial security for potential buyers. A prospectus commonly provides investors

with material information about di6erent securities, mutual funds, stoc's, bonds

and other investments. It also provides with information li'e description of the

company:s business, nancial statements, biographies of o;cers and directors,

detailed information about their compensation, any litigation that is ta'ing place,

a list of material properties and any other material information.

*rospe"t#s ! ,eaning/ Iss#e an Contents&

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Kins of *rospe"t#s ! A)rige *rospe"t#s/ Statement in lie# of

*rospe"t#s0 S%elf *rospe"t#s/ Deeme *rospe"t#s&

,is-statements in a *rospe"t#s/ S"ope of Untr#e Statement

Lia)ility of ,is-statements in *rospe"t#s

MMODULEODULEVV.. RRAISINGAISINGOOFFCCAPITALAPITAL

In order to nance its activities the company needs capital. Capital of a

company is of di6erent 'inds. Capital can be raised at the time of formation of

the company for starting a business or later on, for e8pansion and diversication.

"ut once raised it becomes the permanent liability of the company. And such

capital is raised by issuing prospectus in the mar'et which arouses interest of the

investors in the company and it induces them to invest in the company. It may be

generated through di6erent means from various sources 0e.g. public and private.

S%ares 1 S%are Capitalo ,eaning an Nat#re

o Kins of S%ares

o Iss#e of s%ares ! I*O/ Rig%ts iss#e/ $on#s Iss#e

o Allotment/ Transfer/ Forfeit#re/ S#rrener of s%ares

o ,em)ers%ip of "ompany+ moes of a".#isition/ eligi)ility0

lia)ility0 Rig%ts0 Cessation of ,em)ers%ip0

o Alteration 2 Re#"tion of s%are "apital&

De)ent#re 1 De)t Capitalo Con"ept/ ,eaning 2 C%ara"teristi"s

o S%are%oler 'is-3-'is De)ent#re %oler

o Kins of De)ent#res

o De)ent#re Tr#stees/ De)ent#re Tr#st Dee/ De)ent#re Sto"4

Di'ien !o ,eaningo So#r"es of e"larationo Interim Di'ien

MMODULEODULEVIVI.. CCORPORATEORPORATEMMANAGEMENTANAGEMENT(M(MEETINGSEETINGS))

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!rotection of the investors is one of the primary ob3ectives of Corporate

(aw.

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CASESTOBEREFERRED

$aloman %. $aloman & Co. Ltd.#'()*((+ll- -ep.

Lee %. Lee/s ir 0armin1 Ltd.#(2"+ ll- 3!"

D4ulia 5 malner Motor Transport Ltd %. -.-. D4aramsi 6- #()! 7om. 89

Daimler Co. Ltd. %. Continental Tyre & -u::er Co. Ltd. #(#2*#8+ ll- -ep.

#(#

7ac4a 0. Gu;adar %. C6T 7om:ay 6- #()) $C 83

Gilford Motor Co. Ltd. %. ni;e & Co. #(28+ ComLA !""

7ell e note of t4e ot4er cases mentioned in t4e :oo>s anddiscussed in t4e class.