Project on Company Formation

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COMPANY FORMATION

Welingkar Institute of Management

Development & Research.

Year of submission: - April, 2011.

Acknowledgement

Certificate from the guide
Table of contents

❖ TITLE PAGE
❖ CERTIFICATE FROM THE GUIDE
❖ ACKNOWLEDGEMENT

A. INTRODUCTION
B. BACKGROUND
C. METHODOLOGY
D. CONCLUSION
E. RECOMMENDATION
F. LIMITATION
G. BIBLOGRAPHY
Introduction:-
A company is an association of both natural & artificial persons incorporated under the existing law of a country. Company is a voluntary association of persons formed for the purpose of doing business having a distinct name and limited liability. It is a juristic person having a separate legal entity distinct from the members who constitute it, capable of rights and duties of its own and endowed with the potential of perpetual succession. In terms of the Companies Act “a company means a company formed & registered under the companies Act 1956 or under any of the previous laws relating to the companies" [Section 3(1) (ii)]. In common law, a company is a legal person or legal entity having separate form, & capable of surviving beyond the lives of its members. However, company is not a citizen so as to claim fundamental rights granted to citizens.

Any seven or more persons, or where the company to be formed will be a private company, any two or more persons, associated for any lawful purpose may by subscribing their names to a memorandum of association & otherwise complying with the requirements of the Companies Act 1956 (the Act) in respect of registration, form an incorporated company, with or without limited liability (Section 12 of the Act)

Characteristics of a company:-

A company registered under the Companies Act has the following features: -

(1) separate legal entity;

(2) incorporated body;

(3) artificial legal person;

(4) perpetual succession;

(5) limited liability;

(6) common seal;

(7) right to own property;

(8) right to sue;

(9) right to enter into contracts;

(10) flexibility of investment;

(11) separation of control from the ownership.

Company is a Juristic person' and it can file a suit as an 'indigent person'

An expression 'person' includes not merely a natural person but also other juridical persons. A company being a juristic person would be represented before a Court of law or any other place by a person competent to represent it. It is enough that the person competent to represent a company presents the application on behalf of the company. Minors, lunatics or person under any disability are also entitled to file a suit either through guardian or the next fiend. In such a case it is the guardian or next fiend who is competent to represent the petitioner. A public limited company, which is otherwise entitled to maintain a suit as a legal person, can maintain an application under the Civil Procedure Code.

Company can be a complainant in a criminal case through its representative

The complainant must be a corporeal person capable of making his physical presence in the Court. Its corollary is that even if a complaint is made in the name of an incorporeal person like a company or corporation it is necessary that a natural person represents juristic person in the Court and it is that natural person who is looked upon, for all practical purposes, to be the complainant in the case. Decree passed against a company cannot be satisfied by attachment and sale of properties belonging to other limited companies managed by same group of directors.

Company is a separate legal entity

Limited company is a separate legal entity distinct from its shareholders. Merely because there is only one shareholder, the entities which are otherwise distinct, one is a natural person and the other is an artificial juristic person, it cannot be contended that the said entities merge and one can...
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