PPT: Incorporation of Company and Matters Incidental Thereto | Corporate & Other Laws for CA Intermediate PDF Download

 Page 1


SECTION 407: Definitions
INCORPORATION OF COMPANY 
AND MATTERS INCIDENTAL 
THERETO
Page 2


SECTION 407: Definitions
INCORPORATION OF COMPANY 
AND MATTERS INCIDENTAL 
THERETO
Section 19- Cross- holdings in holding companies
Section 42
Companies act, 1956
Section 19
Companies act ,2013
1) Applied to any body corporate 1) Applies only to companies and 
not to body corporates
*** Applicability of this section has been aptly restricted to companies    
instead of body corporates . 
Page 3


SECTION 407: Definitions
INCORPORATION OF COMPANY 
AND MATTERS INCIDENTAL 
THERETO
Section 19- Cross- holdings in holding companies
Section 42
Companies act, 1956
Section 19
Companies act ,2013
1) Applied to any body corporate 1) Applies only to companies and 
not to body corporates
*** Applicability of this section has been aptly restricted to companies    
instead of body corporates . 
19. (1) No company shall, either by itself or through its nominees, hold any shares in
its holding company and no holding company shall allot or transfer its shares to any of its
subsidiary companies and any such allotment or transfer of shares of a company to its
subsidiary company shall be void:
Provided that nothing in this sub-section shall apply to a case—
(a) where the subsidiary company holds such shares as the legal representative
of a deceased member of the holding company; or
(b) where the subsidiary company holds such shares as a trustee; or
(c) where the subsidiary company is a shareholder even before it became a
subsidiary company of the holding company:
Provided further that the subsidiary company referred to in the preceding proviso
shall have a right to vote at a meeting of the holding company only in respect of the shares
held by it as a legal representative or as a trustee, as referred to in clause (a) or clause (b) of
the said proviso.
(2) The reference in this section to the shares of a holding company which is a company
limited by guarantee or an unlimited company, not having a share capital, shall be construed
as a reference to the interest of its members, whatever be the form of interest.
Section 19- Subsidiary company not to hold shares in its holding 
company
Page 4


SECTION 407: Definitions
INCORPORATION OF COMPANY 
AND MATTERS INCIDENTAL 
THERETO
Section 19- Cross- holdings in holding companies
Section 42
Companies act, 1956
Section 19
Companies act ,2013
1) Applied to any body corporate 1) Applies only to companies and 
not to body corporates
*** Applicability of this section has been aptly restricted to companies    
instead of body corporates . 
19. (1) No company shall, either by itself or through its nominees, hold any shares in
its holding company and no holding company shall allot or transfer its shares to any of its
subsidiary companies and any such allotment or transfer of shares of a company to its
subsidiary company shall be void:
Provided that nothing in this sub-section shall apply to a case—
(a) where the subsidiary company holds such shares as the legal representative
of a deceased member of the holding company; or
(b) where the subsidiary company holds such shares as a trustee; or
(c) where the subsidiary company is a shareholder even before it became a
subsidiary company of the holding company:
Provided further that the subsidiary company referred to in the preceding proviso
shall have a right to vote at a meeting of the holding company only in respect of the shares
held by it as a legal representative or as a trustee, as referred to in clause (a) or clause (b) of
the said proviso.
(2) The reference in this section to the shares of a holding company which is a company
limited by guarantee or an unlimited company, not having a share capital, shall be construed
as a reference to the interest of its members, whatever be the form of interest.
Section 19- Subsidiary company not to hold shares in its holding 
company
Section 21- Authentication of documents, proceedings 
and contracts
Section 54 
Companies act, 1956
Section 21
Companies Act, 2013
1) Applied only to authentication of  
documents and proceedings
2) May be signed by a director, the 
manager, the secretary or other 
authorised officer of the company
3) Need not be under its common 
seal.
1) Apart from  authentication of  
documents and proceedings it also 
applies to contracts
2) May be signed by a key managerial 
personnel or an officer of the 
company duly authorised by the 
Board in this behalf.
3) The words ‘need not be under its 
common seal’ have been omitted
*** Specific exemption affixing the common seal has been removed.
Page 5


SECTION 407: Definitions
INCORPORATION OF COMPANY 
AND MATTERS INCIDENTAL 
THERETO
Section 19- Cross- holdings in holding companies
Section 42
Companies act, 1956
Section 19
Companies act ,2013
1) Applied to any body corporate 1) Applies only to companies and 
not to body corporates
*** Applicability of this section has been aptly restricted to companies    
instead of body corporates . 
19. (1) No company shall, either by itself or through its nominees, hold any shares in
its holding company and no holding company shall allot or transfer its shares to any of its
subsidiary companies and any such allotment or transfer of shares of a company to its
subsidiary company shall be void:
Provided that nothing in this sub-section shall apply to a case—
(a) where the subsidiary company holds such shares as the legal representative
of a deceased member of the holding company; or
(b) where the subsidiary company holds such shares as a trustee; or
(c) where the subsidiary company is a shareholder even before it became a
subsidiary company of the holding company:
Provided further that the subsidiary company referred to in the preceding proviso
shall have a right to vote at a meeting of the holding company only in respect of the shares
held by it as a legal representative or as a trustee, as referred to in clause (a) or clause (b) of
the said proviso.
(2) The reference in this section to the shares of a holding company which is a company
limited by guarantee or an unlimited company, not having a share capital, shall be construed
as a reference to the interest of its members, whatever be the form of interest.
Section 19- Subsidiary company not to hold shares in its holding 
company
Section 21- Authentication of documents, proceedings 
and contracts
Section 54 
Companies act, 1956
Section 21
Companies Act, 2013
1) Applied only to authentication of  
documents and proceedings
2) May be signed by a director, the 
manager, the secretary or other 
authorised officer of the company
3) Need not be under its common 
seal.
1) Apart from  authentication of  
documents and proceedings it also 
applies to contracts
2) May be signed by a key managerial 
personnel or an officer of the 
company duly authorised by the 
Board in this behalf.
3) The words ‘need not be under its 
common seal’ have been omitted
*** Specific exemption affixing the common seal has been removed.
21. Save as otherwise provided in this Act,—
(a) a document or proceeding requiring authentication by a company; or
(b) contracts made by or on behalf of a company,
may be signed by any key managerial personnel or an officer of the company
duly authorised by the Board in this behalf.
Section 21- Authentication of documents, proceedings 
and contracts