COMPANY

1. Company
Dr. Vinod Kumar Yadav
School of Humanities & Social Sciences
HARCOURT BUTLER TECHNICAL UNIVERSITY
Kanpur, India

2. Why Company…
• The company form of organization was
evolved to overcome the limitations of sole
trader and partnership of organsiation.
• It enables collection of vast financial and
managerial resources with provision for
limited liability and continuity of
operations.

3. Company Definition…
A Joint Stock Company is an incorporated
and voluntary association of individuals with
a distinctive name, perpectual succession,
limited liability and common seal, and
usually having a joint capital divided into
transferable shares of a fixed value. Thus, it
is an artificial person created by law. It can
act on its name and others also can act to it.

4. Characteristics of Company
• Distinctive name
• Common seal
• Artificial legal person
• Separate legal entity
• Perpetual succession
• Unlimited life
• Limited liability
• Transfer of interest is possible
• Professional management

5. Advantages of Company
• Unlimited life
• Limited liability
• Professional management
• Large capital resources
• Recognized legal entity
• Large scale production
• Higher profit
• Distributed risk

6. Disadvantages of Company
• Formation complicated
• Double taxation
• Impersonal relationship
• Separate management from owners
• Lack of secrecy

7. Types of Company
One Person
Company
Introduced in
Companies Act
2013; single man
company
Tax holiday for
first 03 Yrs under
startup India
No tax on dividend
distribution
Limited
Liability
Partnership
Under Limited
Liability
Partnership Act
2008
Liability limited to
their agreed
contribution
Separate legal
entity
Private Limited
Company (Pvt.
Ltd)
Ownership transfer
is restricted but
relatively easy
than LLP
Tax holiday for
first 03 Yrs. Under
startup India
Can not issue
share. Preferred by
VC, investors and
banks
Public Limited
Company
(Ltd.)
Ownership transfer
is allowed
Voluntary
association of
members
Can invite public
for investment

8. Private Company
Section 2(68) of Companies Act, 2013 defines private companies.
According to that, private companies are those companies whose
articles of association restrict the transferability of shares and
prevent the public at large from subscribing to them. This is the
basic criterion that differentiates private companies from public
companies.

9. Formation of Private Company
• Can be through online Simplified Proforma for Incorporating Company
electronically (SPICe) on Ministry of Corporate Affairs
• The number of members must be between 2-200.
• There must be at least 02 directors and Max. 15 directors
• There must be one third independent directors
• Memorandum of Association (MOA) is defined under section 2(56) of the
Companies Act 2013. It defines the constitution, powers and objects of the
company.
• The Articles of Association (AOA) is defined under section 2(5) of the
Companies Act. It details all the rules and regulations relating to the
management of the company.
• Paid up capital of one lakh removed after 2015 amendment

10. Public Company
A Public Limited Company under Company Act 2013 is a
company that has limited liability and offers shares to the
general public. It’s stock can be acquired by anyone, either
privately through (IPO) initial public offering or via trades on
the stock market. A Public Limited Company is strictly
regulated and is required to publish its true financial health to
its shareholders.

11. Formation of Public Company
• Can be through online Simplified Proforma for Incorporating
Company electronically (SPICe) on Ministry of Corporate Affairs
• Minimum 07 members and max. no limit
• Minimum of 3 directors
• There must be one third independent directors (Govt. may specify
independent directors in case of public limited company)
• Minimum paid up capital as prescribed time to time (5 Lakhs)
• Memorandum of Association, Article of Association,
• Issue prospectus to invite public investment
• Certificate of business commencement needed after registration

12. Sources of Fund: Company
Source of
Capital
Ownership
Capital
Preference
Share
Equity
Share
Creditorship
Capital
Debenture Bond

13. Thank You
Dr. Vinod Kumar Yadav
School of Humanities & Social Sciences
HARCOURT BUTLER TECHNICAL
UNIVERSITY
Kanpur, India
Email: dr.vkyadav@yahoo.com