Definition of Company

The word Company is derived from the Latin word Com and pany. Com means simultaneously and pany means livelihood. So, company is such kind of business organization where a group of people provides capital for earning profit and by this profit they maintain their livelihood. Company means a company formed and registered under this Act or any existing company. -Sec 2(1), Company Act, 1994. A company is an association of many persons who contribute money or moneys worth to common stock and employs it in Some trade or business and who share the profit or losses arising there form. -James Stephenson. A company is an artificial being, invisible, intangible and existing only in contemplation of law. -Justice John Marshal. A company is an artificial person created by law, having a separate legal entity, with a perpetual succession and a common seal. -L.H. Haney. A corporation by nature an artificial person created or authorized by the legal statute for some specific purpose. -Kimball and Kimball. Company means an association of person united for a common object. -James. A company is an association of many persons who contribute money or moneys worth to common stock and employs it for some common purpose. -Lord Lindley. Corporation is a business that is a legal entity separate from its owner. -New York Corporation Act-1860. By analyzing above definitions we have got that company is: An artificial entity created by law. Has a perpetual succession. Has a common seal. So, the term Company is used to describe an association of a number of persons, formed for some common purpose and registered according to the law relating to companies.

Characteristics/Essential elements of a company

Company is such kind of business organization where a group of people provides capital for earning profit and by this profit they maintain their livelihood. It has some legal and general characteristics which separate it from other organizations. The characteristics of a company can be summarized as follows: General Characteristics features: 1. Formation procedure : There are some formalities in the formation of a company. Company is formats by following such an Act. Company Act, 1994 is followed in our country to format a company. 2. Voluntary Association: A group of people format company for earning profit. Shareholders can retake their capital at any time by selling their shares. Like other organizations, company also has some common

3. Distinct objectives: Company is formatted for some distinct objectives which are mentioned in the Memorandum of Association. Company wont be able to do any kind of activities for out of these activities. 4. Attainment of membership: Any qualified person may become a member of a company by purchasing its share. 5. Amount of capital: Because of providing capital by a lot of people, comparatively the amount of capital becomes huger. 6. Large scale organization: Company is a large scaled organization for huge capital, limited liabilities, huge number of members etc. 7. Transferability of shares: A companys share is freely transferable. Any shareholder may transfer his shares to others in that method which is mentioned in the Articles of Association. 8. Democratic management: The management and responsibilities of a company is given to the Board of Directors who are elected by the shareholders. The company is managed on the principle of democracy J.K. Mitra. 2

9. Distribution of profit: The distributable portion of obtained profit of a company will be distributed among the shareholders by that ratio which is fixed in the AGM. 10. Auditing accounts: The annual profit-loss account and balance sheet are audited by the auditor for the interest of shareholders. 11. Taxation: In most cases the amount of charged tax on a company is comparatively more than other organizations. Here, the tax is charged both on the obtained profit and the shareholders profit. 12. Growth & expansion: Company expands and develops its scope with the development of management and by collecting huge amount of capital.

Company has some legal characteristics too according to the law of relevant countries. The features are: 1. Created by law: Company is a business organization which is formatted with the prevalent Company Act of a country. Company means a company formed and registered under this Act or any existing company. -Sec 2(1), Company Act, 1994. 2. Artificial legal personality: Company is an artificial entity which is created by law and has its own name and common seal to deal a contract or case with the third party.
3. Separate legal entity: According to law, companys entity is distinct from the owners

Legal Characteristics

entity. For this distinction, it is not possible to blame the owners personally for companys liabilities. 4. Registration: Registration is compulsory for a company. After registration under the applicable Act, company can start its activities. 5. Perpetual succession: A companys succession doesnt depend on the shareholders succession for having separate entity. There is a proverb, Members may go, members may come but the company remains forever. 6. Common seal: Though company cant give a signature as like as an individual in case of contracting with third party for that it uses a common seal in lieu of signature. Here, at least 2 directors have to sign on behalf of the company. 3

7. Registered office: Company must have a registered office from where it conducts its activities. A notice has to published to the people in case of changing office. (Section77). 8. Number of members: According to Company Act, in case of Public limited Co. the minimum number of members is 7 and maximum is limited by shares. In case of Private limited Co. the minimum number of members is 2 and maximum is 50. 9. Share capital: The total amount of the capital of a company is divided among many equal portions; every portion of that capital is called a share. Company collects its capital by selling these shares. 10. Liability of the members: The liabilities of the members of a company are limited by their purchased shares. But liabilities may also be limited by assurance. (Section-5). 11. Management & Regulations: The management and ownership of a company is totally different. The Board of Directors controls the management. The activities of a company are mentioned in the Memorandum of Association and Articles of Association. 12. Winding up: Though a company is formatted under an Act as well as it is also wound up under that Act. For above characteristics, a company has obtained universally more acceptability than other organizations.

Classification of Company
To remove the obstacles of sole proprietorship and partnership business, the company was implemented. After that, for the growth and expansion of business sector several types of company was created. Company is classified on the basis of ownership, liabilities, formation, nature etc. which are described below:

Company

On the basis of formation

On the basis of liability

On the basis of nationality

On the basis of ownership

On the basis of number of members

Chartered Company Statutory Company

Company with Limited Liability

Domestic Company

Govt. Company

Private Limited Company

Foreign Company Company with Unlimited Liability Multinational Company

Non-Govt. Company

Registered Company

Public Limited Company

Holding company

Miscellaneous Company
Subsidiary company

A. Company on the basis of formation: Company is generally three (3) types on the basis of formation. They are: 1. Chartered Company: It is the most back-dated company. The company which is formatted by the Head of the Govt. or by the special permission of the king or queen of a country or by the power of royal registration is called a chartered company such as East-India Co., the Chartered Bank Of England, Royal Nepal Airlines etc. This type of company is not seen right now.

2. Statutory Company: The Company which is formatted and conducted through special Act of parliament by the govt. for the welfare of people, then it is called statutory company. A statutory company is established by a special Act of Parliament - J.K. Mitra. 3. Registered Company: When a company is formatted and conducted under the Company Act, then it is called registered company. Most of the companies of Bangladesh is registered under Company Act, 1994. There are 3 kinds of registered company, which are: I. Company limited by shares: In these companies there is a share-capital, and each share has a fixed nominal value which the shareholders pay at a time or by installments. The member is not liable to pay anything more than the fixed value of the share, whatever may be the liabilities of the company. Company limited by guarantee: In these companies, each member promises to pay a fixed sum of money in the event of liquidation of the company. This amount is called guarantee. Sometimes the members are required to buy a share of a fixed value and also give a guarantee for a further sum in the event of liquidation. There is no liability to pay anything more than the value of the share and the guarantee. Unlimited Company: In these companies the liability of the shareholder is unlimited, as in partnership firms. Such companies are permitted under the Company Act but are not known.

II.

III.

B. Company on the basis of liability: On the basis of liability of members there are two types of company(Sec. 5) which are discussed below: 1. Company with limited liability: The liabilities of members of these types of company remain limited till a fixed area. It has also 2 types: Company limited by shares Company limited by guarantee. 2. Company with unlimited liability: The Company whose members liabilities are unlimited indicates this type of company. C. Company on the basis of number of members: On the basis of number of members company can be classified into two categories:

1. Private Limited Company: A private company is just a private affair of members and public at large is not involved at all. The minimum number of members is 2 and maximum is 50. 2. Public Limited Company: A public company is a company the membership of which is open to the general public under the provisions of its Articles. Its shares are transferable. The minimum number of members is 7 and maximum number is limited by shares. D. Company on the basis of Ownership: Company is classified into two categories on the basis of ownership: 1. Government Company: If the 51% or more shares are owned by the govt. of a company, then it will be called Government Company. It is also called Public Sector Company. Though it is formatted under the Company Act, but the conduction and management is directly controlled by the govt. Example: DESA, WASA etc. 2. Non-government Company: The Company in which there is no interfering of govt. in management and conduction, and then it is called Non-government Company. It is also called Private Sector Company. Example: BEXIMCO pharmaceutical ltd., Singer Bangladesh ltd. etc. E. Company on the basis of Nationality: There are three kinds of company on the basis of nationality: 1. Domestic Company: The Company which is formatted under the Company Act of its state, then it is called the domestic company. This type of company can conduct its business in the country or abroad. 2. Foreign Company: If a company formatted and registered in a company but runs its business by establishing office and registering in another country, then it is called foreign company. Example: Pan Pacific, Unicall etc. 3. Multinational Company: The Company which is formatted and registered under the ownership of one or more people of different countries is known as multinational company. Example: Coca cola, HSBC, Unilever Bangladesh ltd. etc. F. Miscellaneous Company: There are some other companies except above: 1. Holding Company: The Company which owns more than 50% shares of another company or control the management of another company, then that company will be called holding Company.

2. Subsidiary Company: Any company owned or controlled by another to the extent that it is a mere instrument to carry out the orders of the owing Company, is called a subsidiary. There are also some other company except the above such as non-business company, special company etc.

Private Ltd. Company VS Public Ltd. Company

Public Ltd. Co. and Private Ltd. Co. both are the companies which are limited by their shares. Though both have perpetual succession and created under the Company Act but there are some differences in their formation process and activities. The differences between them are shown below: No. 01. Topic Formation Procedure Number of members Scope & nature of ownership Size Secrecy Expansion facility Decision making Legal restriction Safety of members Use of the word Limited Preparation of Articles Issuing Prospectus Public Ltd. Company The formation procedure is complex due to the excessive legal activities. Minimum 7 and maximum is limited by shares. The owners live in a vast area and different kind of people may be its member. Normally it is a large sized business. Here maintaining secrecy isnt possible. Because of low risk, there is a good opportunity of expansion. For bureaucratic problem the decision making process is timecosting. Here it is need to be followed more legal restriction. For lawful control the safety of members are more here. The word Limited is only written after this company. It can use Table A instead of Articles of Association. Issuing prospectus is compulsory here. Private Ltd. Company Comparatively its formation procedure is easy. Minimum 2 and maximum 50. Owners may be limited between family and friends. It is a middle sized business. Maintaining secrecy of business information is possible here. Though risk is high so that there is less scope of expansion. Here it is possible to take decision and implement it fast. Here the legal restriction is less than the Public Ltd. co. Here the safety of members is less than the Public Ltd. Co. The word Pvt. Ltd. is written after this company. It is compulsory for this company to prepare Articles of Association. No need to issue prospectus.

02. 03.

04. 05. 06. 07.

08. 09. 10.

11. 12.

No. 13.

Topics Minimum subscription

Public Ltd. Co.

Private Ltd. Co. Private ltd. co. can distribute shares without minimum subscription. It can collect shares only from the members. Its shares are not transferable. It cant issue share warrant. It cant issue debentures to the people. There is no need of keeping the members list. Minimum number of directors is 2. There is no exact rule to choose the directors. Here the directors get the remuneration as they wish. Here there is no regulation like this.

14. 15. 16. 17. 18.

Public ltd. co. needs to collect minimum subscription before distributing shares. Capital It can collect shares by addressing collection people for purchasing shares. Share transfer Its shares are transferable. Share warrant It can issue share warrant with the full value. Issuing It can issue debentures to the debenture public. Members list It is compulsory to make list if the number of members exceed over 50. Number of Minimum number of directors is 3. Directors Directors Directors are elected by the Appointment shareholders through an election. Remuneration Here the directors get the of directors remuneration at a fixed rate. Directors Here the directors have to take retirement compulsory retirement for 1/3 portion of a year. Statutory Here it is compulsory to call a meeting & meeting and reporting to the reporting registrar within the determined time. Audit & It has to audit the annual accounts submission of and submit one copy to the Account registrar and shareholders. Changeability Public Ltd. Co. cant be changed to the other forms.

19. 20. 21. 22.

23.

Here it is not mandatory to call meeting and reporting.

24.

No need to do these.

25.

But this type of company can be changed to Public Ltd. Co.

By above discussion we have discussed about the differences between Public ltd. Co. and Private ltd. Co.

Memorandum of Association Meaning

The Memorandum of Association is a document which contains the fundamental rules regarding the constitution and activities of a company. It is the basic document which lays down how the company is to be constituted and what work it shall undertake. The purpose of the memorandum is to enable the members of the company, its creditors, and the public to know what its powers are and what is the range of its activities. The Memorandum of Association of the company is its charter and defines the limitation of the power of the company established under Act. - Lord Cairns. Memorandum of Association is a document which contains the fundamental rules regarding the constitution and activities of a company. - J.K. Mitra. Its objective is to inform the shareholders, creditors and customers about the scope of authorized field of operation of company.

Memorandum of Association Contents

The Memorandum of Association is a document which contains the fundamental rules regarding the constitution and activities of a company. It is prepared by following the Company Act. The contents of the Memorandum of Association are discussed in the Company Act, 1994 (SECTION-6, 7, 8). They are discussed below: 1. Name Clause: The name of the company with the word Limited at the end of the name of a public company and the words Pvt. Ltd. at the end of the name of a private company. But it is not necessary to add the word ltd. with the name of the company which is made for charity. (Sec-28) There are some rules to determine the name of a company at SECTION-11: It is not allowed to keep the name of an existing company. It is banned to keep the name which is banned in the Govt. gazette (Sec-11;4) . 2. Situation Clause: The name of the State in which the registered office of the company is to be situated. 3. Objects Clause: The objects of the company. The companies (Amendment) Act,1956, provides that in the case of a company formed after the same amending Act, the Memo must state separately The main objects and objects incidental and ancillary to the main objects. Other objects not included in the previous condition. 10

4. Area of operation clause: Except in the case of trading corporations, the State or states to whose territories the objects extend. 5. Liability clause: The nature of the liability of the members, i.e. whether limited by shares or by guarantee or unlimited. 6. Capital clause: In the case of a company having share capital unless the company is an unlimited company, the memorandum shall state the amount of share capital and the division thereof into shares of a fixed amount. 7. Consent Clause: This is the last clause of Memorandum of Association. Here the directors in case of Public ltd. Co. minimum 7 and Private ltd. co. minimum 2 put their signs to give their consent to state that Everybody has collected the minimum subscription They have mentioned their share numbers They sign with their addresses and ID in front of two witnesses. By above discussion, it is discussed about the contents of Memorandum of Association.

Articles of Association- Definition

The Articles of Association contain rules, regulations and bye-laws regarding the internal management of companies. Articles are the internal laws of a company. Articles devise ways for the internal management of the company. - Lord Brobene. The document containing the rules and regulations for the internal management of the companys called Articles of Association. - Yogendra Prasad Verma. A public company may or may not file articles. If it does not, the regulations contained in Table A will apply to it. The Articles shall: Be printed; Be divided into paragraphs numbered consecutively; Be signed by each subscriber of the memorandum of association.

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Articles of Association- Contents

Articles usually contain provisions in respect of the following matters: Name and address of the company. Rules of daily activities of the company. Rules about shares: Number of shares. Process of issuing shares. Collection process of share value. Issuing process of share certificate and share warrant. Procedure of share transfer Process of transferring stocks from shares. Re-issuing process of share certificate etc. Rules about shareholders: Shareholders rights and liabilities. Voting power of shareholders etc. Rules about capital: Changing process of capital increase and decrease. Changing process of share value. Distributing process of new shares. Amount of minimum subscription. Rules about meeting: Process of calling meeting. Process of election. Process of conducting meeting etc. Rules about Directors: Number of directors. Power, duties and rights of directors. Conditions about the remuneration of directors. Number of qualification shares of directors. Disqualification of directors. Retirement and replacement process of directors. Rules about profit and reserve: Process of profit declaration. Process of profit determination. Process of profit distribution. Process of reserving and investing profit etc.

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 Rules about Accounts: Maintaining accounts book. Inspecting accounts. Auditing accounts. Appointing auditor. Process of companys profit-loss etc. Other rules: Appointing managing directors, secretary, underwriter and auditors and determining their remuneration. Use of the seal of the company. Process of notice of companys members. Dissolution process of company etc. By above discussion the contents of Articles of Association are described.

The Doctrine of Indoor Management

When the Articles of association of a company prescribed a particular procedure for doing a thing, the duty of carrying out the provisions lies on the person in charge of the management of the company. Outsiders are entitled to assume that the rules have been complied with. This is known as the doctrine of Indoor Management. Example: The articles of a company provided that the directors can give a bond if authorized by a resolution of the company. The directors gave a bond to T although no resolution was passed. Held, T was entitled to assume that the resolution was passed (because it was a matter of internal procedure) and the company was bound by the bond. The Doctrine of indoor management does not apply in certain cases: a) Void Acts: Where the act is void ab initio, the company is not bound, e.g. forgery. Example: An act ultra vires the memo or articles cant bind a company. b) Knowledge of irregularity: Where the person dealing with the company has notice, actual or constructive, that the prescribed procedure has not been complied with the company is not bound. Example: X Company lends money to Y Company on a mortgage of its asset. The procedure laid down in the articles for such transaction was not complied with. The directors of the two companies were the same. Here it may be presumed that the lender had notice of the irregularity. Hence the mortgage is not binding.

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c) Lack of authority: If an agent of a company makes a contract with a third party and if the act of the agent falls outside the ordinary authority of the agent, the company is not bound. Example: A branch manager of a company drew bills of exchange and also endorsed bills on behalf of the company, although they had no authority for these acts from the company. Held, the company was not bound.

Directors-Number
The number of directors to be appointed to the Board of directors of a Company is determined by the articles. Tha Act provides that there must be at least 3 directors in a Public Company (Other than a public company which has become such by virtue of sec. 43A) and at least 2 directors in other Companies. Sec.252. Subject to the minimum stated above and the maximum fixed by the articles the Company can, by ordinary resolution, increase or decrease the number of directors. It can also appoint additional directors for one year. Sec. 258. The Company can increase the number of directors beyond the maximum fixed by the articles provided previous sanction of the Central Government is obtained. Where the maximum fixedby articles is 12 or less, the number can be increased to 12 without Government approval. Sec. 259

Directors Qualification
A director is an important role for a company. He needs not have any academic qualification: he need not have any degree from the university; he need not have been to school. From the Contract Act and the Companies Act, it can be said that the director must have the following qualifications: 1. A director must be capable of entering into a contract, i.e. He must have attained the age of majority. He must have sound mind. He must not be disqualified from contracting by any law to which he is subject Sec. 11. 2. A director must be a natural person, i.e. not an artificial person. 3. A director must have the requisite qualification shares. The qualification shares are not required in nomination by the Central Government or in certain Statutory Corporations. 4. A director must not be disqualified under the circumstances enumerated in Sec. 274, e.g. if he is an undischarged insolvent or a person convicted by the Court. 14

Directors Disqualification
A person shall not be capable of being appointed director of a company, if 1. He has been found to be of unsound mind by a Court of component jurisdiction and the finding is in force; 2. He is an undischarged insolvent; 3. He has applied to be adjudicated as an insolvent and his application is pending; 4. He has been convicted by a Court of any offense involving moral turpitude and sentenced in respect thereof to imprisonment for not less than six months and a period of five years has not elapsed from the last date of expiry of the sentence; 5. He has not paid any call in respect of shares of the Company held by him, whether alone or jointly with others, and six months have elapsed from the last day fixed for the payment of the call; 6. An order disqualifying him for appointment as director has been passed by a Court in pursuance of Section 203 and is in force, unless the leave of the Court has been obtained for his appointment in pursuance of that Section. The Central Government may, by notification in the Official Gazette, remove the disqualifications under Clauses (d) and (e) above, as regards any individual. A private company, which is not a subsidiary of a public company, may provide by its articles that a person shall be disqualified from being appointed to those specified in 1 to 6 above.

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Company VS Partnership
Company and Partnership both are the form of business organization. Though both are business organization but there are some differences in their formation process and activities. The differences between them are shown below:

No. 01.

Topic Formation Procedure Number of members

Company The formation procedure is complex due to the excessive legal activities. Minimum 7 and maximum is limited by shares for Public ltd. Co. and Minimum 2 and maximum 50 for Private ltd. Co. The owners live in a vast area and different kind of people may be its member. Normally it is a large sized business. Here maintaining secrecy isnt possible. Because of low risk, there is a good opportunity of expansion. For bureaucratic problem the decision making process is timecosting. Here it is need to be followed more legal restriction. For lawful control the safety of members are more here. The word Limited is only written after Public ltd. Co. and The word Pvt. Ltd. is written after Private ltd. Co. Public company can use Table A instead of Articles of Association and It is compulsory for private company to prepare Articles of Association. Issuing prospectus is compulsory for public company. Public ltd. co. needs to collect minimum subscription before distributing shares.

Partnership Comparatively its formation procedure is easy. More than 2 may conduct partnership business.

02.

03.

04. 05. 06. 07.

Scope & nature of ownership Size Secrecy Expansion facility Decision making Legal restriction Safety of members Use of the word Limited Preparation of Articles

Owners may be limited between family and friends. It is a small or middle-sized business. Maintaining secrecy of business information is possible here. Though risk is high so that there is less scope of expansion. Here it is possible to take decision and implement it fast. Here the legal restriction is less. Here the safety of members is less. No need to write this kind of words.

08. 09. 10.

11.

No need to prepare this.

12. 13.

Issuing Prospectus Minimum subscription

No need to issue prospectus. Private ltd. co. can distribute shares without minimum subscription.

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No. 14.

Topic Capital collection

Company

Partnership It can collect shares only from the members. There is no procedure of shares. There is no procedure of share warrant. There is no procedure of issuing debenture. There is no need of keeping the members list. It is fixed by the partners.

15. 16. 17. 18.

It can collect shares by addressing people for purchasing shares or from the members. Share transfer Its shares are transferable. Share warrant Issuing debenture Members list It can issue share warrant with the full value. It can issue debentures to the public. It is compulsory to make list if the number of members exceed over 50. Minimum number of directors is 3 for public company and minimum number of directors is 2 for private company. Directors are elected by the shareholders through an election for public company. Here the directors get the remuneration at a fixed rate. Here the directors have to take compulsory retirement for 1/3 portion of a year. Here it is compulsory to call a meeting and reporting to the registrar within the determined time. It has to audit the annual accounts and submit one copy to the registrar and shareholders. Public Ltd. Co. cant be changed to the other forms but private company can be changed to Public Ltd. Co.

19.

Number of Directors Directors Appointment Remuneration of directors Directors retirement Statutory meeting & reporting Audit & submission of Account Changeability

20.

There is no exact rule to choose the directors. Here the directors get the remuneration as they wish. Here there is no regulation like this.

21. 22.

23.

Here it is not mandatory to call meeting and reporting.

24.

No need to do these.

25.

It may not be transferred to another form of organization.

By above discussion we have discussed about the differences between Company and partnership.

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Meeting Classification
The corporate system of business organization is essentially democratic in structure. The business of the Company is carried on by officials acting under the orders of the Board of Directors, which is the executive head of the Company. But the directors are elected to the Board by the shareholders of the company and must abide by the wishes of the shareholders as expressed in resolutions passed in meetings convened for the purpose. The Companies Act provides for the following types of meetings:

Meetings

Meetings of the shareholders

Other meetings

Meetings Of directors

Statutory Meeting General meeting Meetings of the creditors

Extra-ordinary general meeting Class meetings

Meetings of the debenture holders

A. Meetings of the shareholders: 1. Statutory Meeting: Every public company ltd by shares capital, must within a period of not less than one month and not more than six months from the date at which the company is entitled to commence business, hold a general meeting of members which is to be called, the statutory meeting. In this meeting the members are to discuss a report by directors, known as the Statutory Report, which contains particulars relating to the formation of the Company. Sec. 165(1). 18

2. Annual General Meeting: General meeting of a company means a meeting of its members for specified purposes. There are two kinds of General Meetings. The Annual General Meeting. Other general meetings. The statutory provisions regarding the Annual General Meeting are: Section 166, 167, 168, 171. The court has no power to direct the calling of the annual general meeting. 3. Extra ordinary General Meeting: The Board of Directors can be compelled to hold a General Meeting upon request or requisition made for it, under the following conditions. Sec. 169. B. Other General Meetings: 1. Meetings of Directors: The Board of directors can call a general meeting of the members any time by giving not less than 21 days notice. A general meeting may be called with a shorter notice under certain circumstances. 2. Meeting of Company Law Board: The Company Law Board can call such a meeting of its own motion or on the application of any director of the company or any member of the company who would be entitled to vote in the meeting.

Resolutions of A Company Classification

The Act of 1956 classifies resolutions into the following types:

Resolution

Special resolution

Ordinary resolution

Resolution requiring special notice

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A. Special resolution: A special resolution is necessary for deciding important matters. The Act specifies what these matters are. (Example: Reduction of Capital; Winding up etc.).

Procedure for passing a special resolution

A special resolution may be passed in a general meeting of members called in the usual way with the usual notice. But the following conditions must be satisfied. Sec. 189. 1. The notice calling the general meeting must specify that a special resolution will be moved. 2. The number of votes cast in favor of the resolution whether by show of hands or by poll, must be at least three times the number cast against it.

Special resolution is required for the following issues: Alteration of Memorandum for changing the place of registered office from one state to another or alteration of objects with the leave of the Company Law Board. Change of name of the company with the consent of the Central Government. Alteration of the Articles of the company. Conversion of any portion of the uncalled capital into reserve capital. Reduction of share capital. Variation of shareholders rights. Payment of interest out of capital.

B. Ordinary resolution: All matters not required to be decided by a special resolution, may be decided by a ordinary resolution. An ordinary resolution is passed, when the number of votes cast in its favor exceeds those cast against it. C. Resolution By Special Notice: Where by any provision contained in the Act or in the Articles, special notice is required of any resolution, the intention to move the resolution shall be given to the Company not less than 14 days before the date of meeting where the resolution is to be moved, exclusive of the day on which the notice is served or deemed to be served and the day of the meeting. Sec. 190(1).

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Shares
Definition: A share may be defined as an interest in the company entitling the owner thereof to receive proportionate part of the profits, if any, and of a proportionate part of the company upon liquidation. A Companys owned capital is split up into a large number of equal parts, each such part being called a share. - Y.k. Bhushan. A share is not a sum of money, but is an interest measured in the sum of money and made up of various rights contained in the contract. Justice Forwell.

Classification
Shares

Equity shares

Preference shares
Cumulative Non-cumulative Redeemable Irredeemable Participating Non-participating Convertible Non-convertible

Deferred shares

Other shares Right share Bonus share Non Par value shares

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Winding Up
The winding up or liquidation of a company means the termination of the legal existence of a Company by stopping its business, collecting its assets and distributing the assets among creditors and shareholders. There are three methods of winding up of a company: By members Voluntary winding up By creditors

Winding up of a company

Compulsory winding up Voluntary winding up under the supervision of court

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