Navigating Solutions and Darkness

S. 4:  Partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. Elements of Partnership: At least two persons A relationship arising out of an agreement between two or more persons to do a business. The agreement must be to share the profits of a business. The business must be carried on by all or any of them acting for all.  Mutual agency can be said to be the true test to determine whether something is a partnership. A partnership firm has no legal existence apart from its partners. It isn't a legal entity, nor does it have a separate personality as does a corporation - it merely represents the collective of its partners. A partnership arises through signing of the partnership deed by all partners.  Classification: Particular Partnership:  S. 8:  When two or more persons agree to do business in a particular adventure or undertaking or for a particular per...

Though a company is an entity distinct from its members, it is also composed of its members. These members express the will of the company through resolutions passed at validly held meetings. Members Meetings are of three types: Annual General Meeting (AGM):  An annual event where members get an opportunity to discuss the activities of the company.  S. 96:  Every company other than OPC is required to hold an AGM every year.   Extraordinary General Meeting:  All general meetings other than AGMs - shall be called by the board the board on requisition of shareholders  requisitionists tribunal All business items can be transacted at extraordinary general meetings - special business.  S. 100:  Provisions for holding and calling such meetings.  Class Meeting:  Held by holders of a particular class of shares/ debentures/ or by creditors. Notice of Meeting: Not less than 21 days' clear notice either in writing or electronical...

S. 2(34), Companies Act, 2013:  A director appointed to the Board of a company - person appointed to perform the duties and functions of director of a company in accordance with provisions of the Companies Act, 2013. S. 2(10):  Board of Directors:  Collective body of the directors of the company. S. 149(1):  A minimum of 1 director in case of a One Person Company, 2 in case of a private company, and a maximum of 15 directors. More directors may be appointed after a special resolution in General Meeting.  There should be at least one female director appointed. S. 165:  Maximum number of directorships (including alternate directorships) held by a single person is 20. In addition, the number of directorships in public or private companies that are either holding or subsidiary companies of a public company shall be limited to 10. This limit may further reduced through a special resolution. S. 149(3):  Residence of a director in India is compuls...

The process of company formation can be divided into three stages: Promotion Incorporation by Registration Commencement of Business Promotion:  The process of conceiving an idea and developing it into a concrete proposition or project to be accomplished by the incorporation and floatation of the company. The person taking the necessary steps to accomplish these objectives is known as  promoter.  [S. 2(69), Indian Companies Act, 2013]  People in accordance with whose advice, directions or instructions the Board of Directors of the company is accustomed to act  are also treated as promoters.  A director/ officer/ employee who has control over the affairs of the company, directly or indirectly whether as a shareholder, director or otherwise  is considered a promoter. In  Kelner vs. Baxter LR  (1886) 2 CP 174,  it was held that the company couldn't ratify contracts made by a promoter before incorporation. However, specific perf...

Companies can be classified by the manner in which they are limited into: Shares:  A registered company, whether public or private, having  the liability of its members limited by memorandum to the amount, if any, unpaid on the shares  respectively held by them. Guarantee:  A registered company having the liability of its members limited by its memorandum  to such an amount as the members may respectively undertake by the memorandum to contribute to the assets of the company  in the event of its being wound up. Liability here arises only upon winding up, and not while the company is a going concern. Unlimited:   A company not having any limit on the liability of its members.  Maximum liability in such cases can be to the full extent of their properties, to meet the obligations of the company by contributing to its assets. The members are not directly liable to creditors of the firm, unlike in a partnership, but to the company itself. A com...

The concept of  incorporation  involves giving a commercial entity a  separate legal personality.  In the eyes of the law, a company is considered an individual entity with its own agency, ability to own property, and generally conduct itself in matters of business as though it were a human person.  Advantages of incorporation Corporate personality:  A partnership firm has no existence aside from that of its members, but a company is  a distinct legal or juristic person independent of its members. Limited Liability:  In a partnership, each partner is liable to the full extent of their assets for the debts of the partnership. In the case of companies limited by shares, no member is bound to contribute anything more than the nominal value of the shares held by him which remains unpaid.  Perpetual Succession:  The existence or continuity of the company isn't affected by the death or insolvency of individual members. Transferab...

Company vs Partnership Company Partnership Distinct legal person Not distinct from persons who compose it Property belongs to company Property belongs to partners Creditors can proceed against company only Creditors can proceed against partners Members not agents of the company or each other Partners agents of the company and inter se Member of company can contract with firm Partner can’t contract with his firm Shares freely and ordinarily transferable Partner can’t transfer shares without consent of other partners Restrictions in articles bind the public Restrictions on partner’s authority in partnership contract don’t bind outsiders Liability limited by shares or by guarantee Unlimited liability Perpetual succession Death or insolvency of partner dissolves firm unless otherwise provided Any number of members. Private co – 2 – 50 members. Public company – min. 7 members Can’t have more than 100 members Legally required t...

Company:  An association of like minded persons formed for the purpose of carrying on same business or undertaking. May be incorporated or unincorporated. o  Incorporated –  separate person distinct from the individuals constituting it. o  Unincorporated –  mere aggregation of individuals -  Body corporate –  persons composing it are made into one body by incorporation, clothing it with legal personality and turning it into a corporation. - Owes its existence to special act of parliament or companies law - Association of both natural and artificial persons incorporated under the existing law of a country. - Association not for profit acquires corporate life if givens a license. Characteristics 1.  Corporate personality-  Once a company has been validly constituted under the Companies Act, it becomes a legal person distinct from its members, and it is immaterial whether any member has a large or small proportion of the shares, and w...

Stare Decisis - Adhere to the decision and don’t unsettle established things. - Intention to bring certainty and uniformity Ratio Decidendi - Underlying principle of a judicial decision - Proposition of law necessary for the decision, or which can be extracted from the decision - Decision based on material facts of the case – where issue to be answered on principles, extracting the material facts and disregarding the immaterial elements. -  Ratio decidendi or general principle has the binding effect as a precedent, not obiter dictum.  Determination or separation of ratio from obiter isn’t so easy. Obiter Dicta - Said by the way - Judicial utterances in the course of delivering a judgment, which taken by themselves weren’t necessary for that particular decision.  PRINCIPAL SOURCES OF LAW Customary Law:  Even though this is the most ancient form of law, its importance is diminishing with the growth of legislation and precedent. How customs are made:...