Classes Of Companies Under The Act (Part - 2) CA Foundation Notes | EduRev

Business Laws for CA Foundation

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CA Foundation : Classes Of Companies Under The Act (Part - 2) CA Foundation Notes | EduRev

The document Classes Of Companies Under The Act (Part - 2) CA Foundation Notes | EduRev is a part of the CA Foundation Course Business Laws for CA Foundation.
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4. On the basis of access to capital:

(a) Listed company: As per the definition given in the section 2(52) of the Companies Act, 2013, it is a company which has any of its securities listed on any recognised stock exchange. Whereas the word securities as per the section 2(81) of the Companies Act, 2013 has been assigned the same meaning as defined in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956.

(b) Unlisted company: means company other than listed company.

5. Other companies:

(a) Government company [Section 2(45)]: Government Company means any company in which not less than 51% of the paid-up share capital is held by-

(i) the Central Government, or

(ii) by any State Government or Governments, or

(iii) partly by the Central Government and partly by one or more State Governments, and the section includes a company which is a subsidiary company of such a Government company.

Classes Of Companies Under The Act (Part - 2) CA Foundation Notes | EduRev

(b) Foreign Company [Section 2(42)]: It means any company or body corporate incorporated outside India which—

(i) has a place of business in India whether by itself or through an agent, physically or through electronic mode; and

(ii) conducts any business activity in India in any other manner.

(c) Formation of companies with charitable objects etc. (Section 8 company):

Section 8 of the Companies Act, 2013 deals with the formation of companies which are formed to

• promote the charitable objects of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment etc.

Such company intends to apply its profit in

• promoting its objects and

• prohibiting the payment of any dividend to its members.

Examples of section 8 companies are FICCI, ASSOCHAM, National Sports Club of India, CII etc.

Power of Central government to issue the license–

(i) Section 8 allows the Central Government to register such person or association of persons as a company with limited liability without the addition of words ‘Limited’ or ‘Private limited’ to its name, by issuing licence on such conditions as it deems fit.

(ii) The registrar shall on application register such person or association of persons as a company under this section.

(iii) On registration the company shall enjoy same privileges and obligations as of a limited company.

Revocation of license: The Central Government may by order revoke the licence of the company where the company contravenes any of the requirements or the conditions of this sections subject to which a licence is issued or where the affairs of the company are conducted fraudulently, or violative of the objects of the company or prejudicial to public interest, and on revocation the Registrar shall put ‘Limited’ or ‘Private Limited’ against the company’s name in the register. But before such revocation, the Central Government must give it a written notice of its intention to revoke the licence and opportunity to be heard in the matter.

Order of the Central Government: Where a licence is revoked there the Central Government may, in the public interest order that the company registered under this section should be amalgamated with another company registered under this section having similar objects, to form a single company with such constitution, properties, powers, rights, interest, authorities and privileges and with such liabilities, duties and obligations as may be specified in the order, or the company be wound up.

Penalty/punishment in contravention: If a company makes any default in complying with any of the requirements laid down in this section, the company shall, be punishable with fine varying from ten lakh rupees to one crore rupees and the directors and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to three years or with fine varying from twenty- five thousand rupees to twenty-five lakh rupees, or with both and where it is proved that the affairs of the company were conducted fraudulently, every officer in default shall be liable for action under section 447 which deals with Fraud.

Section 8 Company- Significant points:

• Formed for the promotion of commerce, art, science, religion, charity, protection environment, sports, etc.

• Requirement of minimum share capital does not apply.

• Uses its profits for the promotion of the objective for which formed.

• Does not declare dividend to members.

• Operates under a special licence from Central Government.

• Need not use the word Ltd./ Pvt. Ltd. in its name and adopt a more suitable name such as club, chambers of commerce etc.

• Licence revoked if conditions contravened.

• On revocation, Central Government may direct it to

– Converts its status and change its name

– Wind up

– Amalgamate with another company having similar object.

• Can call its general meeting by giving a clear 14 days notice instead of 21 days.

• Requirement of minimum number of directors, independent directors etc. does not apply.

• Need not constitute Nomination and Remuneration Committee and Shareholders Relationship Committee.

• A partnership firm can be a member of Section 8 company.

Classes Of Companies Under The Act (Part - 2) CA Foundation Notes | EduRev

(d) Dormant company (Section 455): Where a company is formed and registered under this Act for a future project or to hold an asset or intellectual property and has no    significant accounting transaction, such a company or an inactive company may make an application to the Registrar in such manner as may be prescribed for obtaining the status of a dormant company. “Inactive company” means a company which has not been carrying on any business or operation, or has not made any significant accounting transaction during the last two financial years, or has not filed financial statements and annual returns during the last two financial years. “significant accounting transaction” means any transaction other than—

(i) payment of fees by a company to the Registrar;

(ii) payments made by it to fulfil the requirements of this Act or any other law;

(iii) allotment of shares to fulfil the requirements of this Act; and

(iv) payments for maintenance of its office and records.

(e) Nidhi Companies: Company which has been incorporated as a nidhi with the object of cultivating the habit of thrift (cost cutting) and savings amongst its members, receiving deposits from, and lending to, its members only, for their mutual benefit and which complies with such rules as are prescribed by the Central Government for regulation of such class of companies. [Section 406 of the Companies Act, 2013]

Classes Of Companies Under The Act (Part - 2) CA Foundation Notes | EduRev

(f) Public Financial Institutions (PFI): By virtue of Section 2(72) of the Companies Act, 2013, the following institutions are to be regarded as public financial institutions:

(i) the Life Insurance Corporation of India, established under the Life Insurance Corporation Act, 1956;

(ii) the Infrastructure Development Finance Company Limited;

(iii)    specified company referred to in the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002;

(iv) institutions    notified by the Central Government under section 4A(2) of the Companies Act, 1956 so repealed under section 465 of this Act;

(v) such other institution as may be notified by the Central Government in consultation with the Reserve Bank of India: Conditions for an institution to be notified as PFI: No institution shall be so notified unless—

(A) it has been established or constituted by or under any Central or State Act; or

(B) not less than fifty-one per cent of the paid-up share capital is held or controlled by the Central Government or by any State Government or Governments or partly by the Central Government and partly by one or more State Governments.

Classes Of Companies Under The Act (Part - 2) CA Foundation Notes | EduRev

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