Types of Companies Overview

In a guarantee company, members' liability can be called upon only after winding up, while in a company limited by shares, liability can be called upon at any time.

Guarantee companies do not raise initial working funds from their members; they rely on other sources such as endowments, fees, and donations.

The ruling clarifies that the right of a guarantee company to refuse member interest transfers differs fundamentally from that of companies limited by shares.

<p>An unlimited company is defined as a company without any limit on its members' liabilities.</p> Signup and view all the answers

<p>The liability of a member in an unlimited company ceases when they are no longer a member.</p> Signup and view all the answers

<p>If an unlimited company has share capital, its Articles of Association must state the total amount of share capital and the amount of each share.</p> Signup and view all the answers

<p>No, members of a guarantee company can only be called upon for liability after the winding up of the company.</p> Signup and view all the answers

<p>Membership in a guarantee company may carry privileges such as voting rights and involvement in decision-making that differ from those of ordinary shareholders.</p> Signup and view all the answers

<p>The minimum fine is ten lakh rupees.</p> Signup and view all the answers

<p>Directors and officers can be fined a minimum of twenty-five thousand rupees, up to twenty-five lakh rupees.</p> Signup and view all the answers

<p>Every officer in default may be liable for action under section 447.</p> Signup and view all the answers

<p>It is formed for promoting objectives like commerce or charity and doesn't declare dividends to its members.</p> Signup and view all the answers

<p>There is no requirement for minimum share capital.</p> Signup and view all the answers

<p>It operates under a special license from the Central Government.</p> Signup and view all the answers

<p>It may direct the company to convert its status, wind up, or amalgamate with another similar company.</p> Signup and view all the answers

<p>A Section 8 Company must provide a clear 14 days’ notice.</p> Signup and view all the answers

<p>A subsidiary company is defined as one that is controlled by the holding company through either the composition of the Board of Directors or the control of more than half of the total voting power.</p> Signup and view all the answers

<p>Controlling the composition means that the holding company has the power to appoint or remove a majority of the directors of the subsidiary company.</p> Signup and view all the answers

<p>A company is identified as a subsidiary of another if the latter controls the Board of Directors or holds more than 50% of its share capital, regardless of how many layers are present.</p> Signup and view all the answers

<p>Yes, a subsidiary can also be a holding company for another subsidiary, thereby creating layers of subsidiary relationships.</p> Signup and view all the answers

<p>Holding more than 50% of the share capital allows a holding company to exert significant control over the subsidiary's operations and decisions.</p> Signup and view all the answers

<p>'Layer' refers to the subsidiary or subsidiaries owned by a holding company, indicating the levels of ownership.</p> Signup and view all the answers

<p>Yes, the law prescribes that certain classes of holding companies must not have layers of subsidiaries beyond a specified number.</p> Signup and view all the answers

<p>If the holding company can appoint or remove the majority of directors, the subsidiary relationship is reinforced, solidifying its control.</p> Signup and view all the answers

<p>A memorandum must be signed by at least seven persons, two in the case of a private company, and one for a One Person Company, in the presence of at least one witness.</p> Signup and view all the answers

<p>A minor cannot be a signatory because they are not competent to contract.</p> Signup and view all the answers

<p>The compulsory clauses include the particulars about the signatories and a witness, along with the rights attached to different classes of shares.</p> Signup and view all the answers

<p>'Ultra vires' means beyond the powers and refers to actions taken that exceed the legal authority of the company.</p> Signup and view all the answers

<p>If a memorandum contains provisions contrary to the Companies Act, it will be devoid of any legal effect.</p> Signup and view all the answers

<p>The memorandum must document the address, description, and occupation of each signatory and the witness.</p> Signup and view all the answers

<p>Yes, a company, being a legal person, can subscribe to the memorandum through its agent.</p> Signup and view all the answers

<p>The doctrine of ultra vires limits a company's activities to those expressly stated in its memorandum.</p> Signup and view all the answers

<p>Constructive notice implies that a person is presumed to know the contents of the company's documents, regardless of whether they have read them.</p> Signup and view all the answers

<p>A person is presumed to have constructive notice of the memorandum, articles, and all other related documents like Special Resolutions.</p> Signup and view all the answers

<p>If a contract exceeds the company's powers, the person cannot acquire any rights under the contract against the company.</p> Signup and view all the answers

<p>The Doctrine of Indoor Management allows outsiders to assume that all internal formalities have been followed if an act is authorized by the company's articles or memorandum.</p> Signup and view all the answers

<p>The landmark case associated with the Doctrine of Indoor Management is The Royal British Bank vs. Turquand.</p> Signup and view all the answers

<p>It is important because it holds individuals accountable for understanding the limitations and powers of the company as per its governing documents.</p> Signup and view all the answers

<p>The key distinction is that constructive notice presumes knowledge of documents, while the Doctrine of Indoor Management protects outsiders by assuming internal compliance without requiring them to verify further.</p> Signup and view all the answers

<p>Under constructive notice, it is implied that a person not only knows but also understands the documents in their true context.</p> Signup and view all the answers