VIGNESH KUMAR - Qualified Company Secretary

  PROVISION COVERED Section 4 RULE COVERED Rule 8A of the Companies (Incorporation) Rules, 2014 CONCEPT COVERED Circumstances in which name of a company is considered undesirable. INTRODUCTION : The economic corporate vessel recognised as a company under the law deploys its operations and functions in its name. A company to contract by itself needs an identity and the name of a company is such identity through which such entity gets recognised to the eyes of the stakeholders. Though the law does not ascribe to placing complete restriction on application and usage of a name of a company, Rule 8A of the Companies (Incorporation) Rules, 2014 as amended from time to time prescribes certain circumstances wherein the name of a company is considered undesirable. The Collins Dictionary defines the term undesirable as something that is not pleasant and objectionable. In this context, name of a company may be...

PROVISION COVERED Section 4 RULE COVERED Rule 8 of the Companies (Incorporation) Rules, 2014 CONCEPT COVERED Name reservation of Company NAME OF THE COMPANY – THE ESSENCE : Every Company is clothed with the character of being a distinct entity from its members and directors and distinguishable from other companies domiciled in India in terms of its name and scope of operation. The Andhra High Court in the case of “ Walnut Packaging Private Limited v. The Sirpur Paper Mills Limited (2008) ” held that “In Company Law,  separ ate  legal  entity of incorporated body has to be maintained for reasons more than one. ” Therefore, the legal status of company is established and beyond a reasonable doubt, the company being a separate legal entity shall contract with its stakeholders in its own name. Though the members are contributories and directors are the agents, yet the Company undertakes every tra...

PROVISION COVERED Section 4 CONCEPT COVERED The Memorandum of Association, its significance and contents THE CHARTER DOCUMENT : The Memorandum of Association ( “MOA” ) can rightfully be termed as the constitutional document of every company. While the Companies Act attribute to the overall regulation and governance of all the companies domiciled in India on a collective level, the MOA finds prominence as the fundamental document with respect to every company at an individual level that regulates the conduct of companies. IDENTITY OF THE COMPANY : The MOA outlines the identity of a company and creates a well-defined boundary within which a company would operate. The MOA defines the very purpose of formation and existence of a company. The charter document also outlines the structure of a company in terms of the liability of its owners. The Supreme Court of India in the case of “ Federal Bank Ltd v. Sagar Thomas & Ors. (2003)...

PROVISION COVERED Section 3A CONCEPT COVERED Reduction of members below the statutory limit prescribed INTRODUCTION : Section 3A of the Companies Act, 2013 found its inception vide. Companies (Amendment) Act, 2017 and the same corresponds to Section 45 of the Companies Act, 1956. The section outlines the liability of members in case where the structure of the company is not in line with the provisions laid down under the Companies Act. The said section also serves as a ground for removing the clothing that a company enjoys which is reckoned as corporate veil. POSITION OF A SHAREHOLDER : The position of a shareholder can be well attributed to his contribution to the Company in monetary terms. In other words, shareholder is characterised by his interest in the Company by the virtue of his investment in monetary terms. The law expects the members of the company to abide by the notion of welfare of company first rather than placing...