company law - The Institute of Company Secretaries of India, The ICSI

947 Pages·2013·9.43 MB·English

STUDY MATERIAL

EXECUTIVE PROGRAMME
COMPANY LAW

PAPER 1

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EXECUTIVE PROGRAMME
COMPANY LAW
In view of increasing emphasis on adherence to norms of good corporate governance,
Company Law assumes an added importance in the corporate legislative milieu, as it deals with
structure, management, administration and conduct of affairs of Companies. A thorough study
of various provisions of the Companies Act is a must for becoming a competent and efficient
Company Secretary. In the light of this, the study material has been published to impart
thorough knowledge to the students preparing for the Company Law paper of the CS Executive
Programme. The purpose of this study material is to develop an understanding of the regulation
of registered companies and to provide thorough understanding of the various provisions of the
Company Law as well as Schedules and Rules made thereunder including their interpretation
through case laws, departmental clarifications etc. Additionally this study material also provides
conceptual understanding of the principles of Cooperatives Law.
Company Secretaryship being a professional course, the examination standards are set
very high, with emphasis on knowledge of concepts, applications, procedures and case laws,
for which sole reliance on the contents of the study material may not be enough. Besides
Company Secretaries Regulations, 1982 requires the students to be conversant with the
amendments to the laws made upto six months preceding the date of examination. This study
material may therefore be regarded as basic material and must be read along with the Bare Act,
Rules, Regulations, Case Law, as well as suggested readings.
The amendments made upto December, 2012 have been incorporated in this study
material. However, it may happen that some developments might have taken place during the
printing of the study material and its supply to the students. The students are therefore advised
to refer to the 'Student Company Secretary', Chartered Secretary and other publications for
updation of study material. In the event of any doubt, students may contact the Directorate of
Academics and Professional Development in the Institute for clarification.
Although due care has been taken in publishing this study material yet the possibility of
errors, omissions and/or discrepancies cannot be ruled out. This publication is released with an
understanding that the Institute shall not be responsible for any errors, omissions and/or
discrepancies or any action taken in that behalf.
Should there be any discrepancy, error or omission noted in the study material, the Institute
shall be obliged if the same are brought to its notice for issue of corrigendum in the 'Student
Company Secretary'.
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EXECUTIVE PROGRAMME
SYLLABUS
FOR
MODULE 1 - PAPER 1: COMPANY LAW (100 MARKS)
Level of Knowledge: Expert Knowledge
Objective: To acquire knowledge and develop understanding of the regulatory framework of companies
with reference to various provisions of Companies Act and its schedules, rules, notifications, circulars,
clarifications there under including case laws and Secretarial standards.
Detailed Contents:
1. Introduction
• Historical Development of Concept of Corporate Law in India
• Company – Definition, Meaning, Nature and its Characteristics
• Nature and Forms of Business
• Company vis-à-vis other Forms of Business
• Concept of Corporate Personality, Corporate Veil, Limited Liability and Citizenship
2. Incorporation and its Consequences
• Types of Companies and their incorporation
• Promoters – Meaning, Position, Duties, Rights, Responsibilities and Liabilities
• Formation of Companies – Procedural Aspects
• Memorandum of Association & Articles of Association and their Alteration
• Contracts and Conversion of Companies
• Commencement of Business
• Doctrine of Ultra-Vires, Constructive Notice, Indoor Management, Alter Ego
3. Financial Structure
• Concept of Capital and Financing of Companies– Sources of Capital; Classes and Types of
Shares; Equity Shares with Differential Rights; Issue of Shares at Par, Premium and Discount;
Forfeiture and Surrender of Shares; Bonus Issues; Rights Issues; Issue of Sweat Equity Shares;
Employees Stock Option Scheme; Private Placement; preference shares and other forms of
securities
• Alteration of Share Capital– Reduction of Capital; Buy–Back of Shares
• Prospectus– Definition; Abridged Prospectus; Red–Herring Prospectus; Shelf Prospectus;
Information Memorandum; Contents, Registration; Misrepresentations and Penalties
• Debt Capital – Debentures, Debenture Stock, Bonds; Recent Trends and Dynamics of Corporate
Debt Financing; Debenture Trust Deed and Trustees; Conversion of and Redemption of
Debentures
• Securing of Debts:Charges ; Creation, Modification and Satisfaction of Charges
• Allotment and Certificates – General Principles and Statutory Provisions related to Allotment;
Minimum Subscription; Irregular Allotment; Procedure of Issue of Share Certificates and Warrants
(v)
4. Membership in a Company
• Modes of Acquiring Membership
• Rights and Privileges of Members, Register of Members
• Dematerialisation and Rematerialisation of Securities
• Transfer and Transmission of Securities in Physical and Dematerialized forms
• Nomination
5. Management and Control of Companies
• Directors– Types, Director’s Identification Number (DIN), Appointment/Reappointment,
Qualifications, Disqualifications, Vacation of Office, Retirement, Resignation and Removal of
Managing and Whole–Time Directors and Manager
• Role and Responsibilities of Directors
• Powers and Duties
• Loans to Directors
• Remuneration of Directors
• Office or Place of Profit
• Contracts in which Directors are Interested
• Board of Directors and its Committees
• Company Secretary – Appointment, Role and Responsibilities
• Company Secretary as a Key Managerial Personnel
• Meetings:
• Meetings of Board and Committees– Frequency, Convening, Proceedings, Video Conferencing of
Board/Committee(s); Resolution by Circulation; Minutes and Evidence
• General Meetings – Kinds of Meetings; Law, Practice and Procedure Relating to Convening and
Proceedings at General and Other Meetings; Notice, Quorum, Chairman, Proxy, Voting including
Voting through Electronic Means; Resolutions, Circulation of Members’ Resolution, etc.; Postal
Ballot; Recording, Signing and Inspection of Minutes;
• Distribution of Powers of a Company – Division of Powers between Board and General Meetings;
Acts by Directors in Excess of Authority; Monitoring and Management
• Sole Selling and Buying Agents – Meaning, Appointment and Reappointment, Removal; Powers
of Central Government and Rules Framed for the Purpose
6. Investments, Loans and Deposits
• Law relating to making investments in and granting loans to other bodies corporate and giving
guarantees and providing security
• Acceptance of Deposits, Renewal, Repayment, Default and Remedies
7. Accounts and Audit
• Books of Accounts
• Financial Statements
• Auditors – Appointment, Resignation and Removal; Qualification and Disqualification; Rights,
Duties and Liabilities
• Audit and Auditor’s Report
• Cost Audit and Special Audit
(vi)
8. Dividends
• Profit and Ascertainment of Divisible Profits
• Declaration and Payment of Dividend
• Treatment of Unpaid and Unclaimed Dividend
• Transfer of Unpaid and Unclaimed Dividend to Investor Education and Protection Fund
• Board’s Report and Disclosures Contents and Annexure to Board’s Report
• Directors’ Responsibility Statement – Preparation and Disclosures
• Compliance Certificate – Need and Objective; Issue and Signing by Practising Company
Secretary
• Corporate Governance Report
9. Registers, Forms and Returns
• Statutory Books and Registers prescribed under various provisions of the Company Law–
Maintenance, Authentication Place of Keeping and Inspection
• Filing of various Forms and Returns with the Authorities
• Procedure and Penalties for Delayed Filing
• Annual Return –Nature and Significance; Contents; and Certification by Practising Company
Secretary
10. Inspection and Investigation
• Inspection of Documents
• Powers of the Inspector
• Seizure of Books And Documents
• Inspector’s Report
• Power of the Registrar of Companies
• Investigation into Affairs of the Company
11. Majority Rule and Minority Rights
• Law relating to Majority Powers and Minority Rights
• Shareholder Remedies – Actions by Shareholders; Statutory Remedies; Personal Actions
• Prevention of Oppression and Mis-Management
12. Merger, De-merger, Amalgamation, Compromises and Arrangements – An Overview
13. Producer Companies
• Concept, Formation, Functioning and Dissolution
14. Limited Liability Partnerships
• Concept, Formation, Membership, Functioning and Dissolution
15. Application of Company Law to Different Sectors
• Banking
• Insurance
• Others
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16. Offences and Penalties
• Introduction
• Officer in Default
• Penalties
17. Compounding of Offences
18. Winding up of Companies –An Overview
• Concept and Modes
19. Striking Off Name of Companies
20. An Introduction to E-Governance and XBRL
(viii)

LIST OF RECOMMENDED BOOKS
MODULE I
PAPER 1 : COMPANY LAW

Readings:
1. Dr. Avtar Singh : Company Law; Eastern Book Company, 34, Lalbagh, Lucknow –
226 001
2. C.R. Datta : Datta on the Company Law; Lexis Nexis, Butterworths Wadhwa,
Nagpur
3. A. Ramaiya : Guide to the Companies Act; Lexis Nexis, Butterworths Wadhwa,
Nagpur
4. K.C. Garg, R.C. : Company Law; Kalyani Publishers, 1/1, Rajinder Nagar, Civil
Chawla, Vijay Gupta Lines, Ludhiana – 141 001.
5. A.K. Mujumdar, Dr. : Company Law and Practice; Taxmann, 59/32, New Rohtak Road, New
G.K. Kapoor Delhi-110 005.
6. V.S. Datey : Guide to Tax and Corporate Laws; Taxmann, 59/32, New Rohtak
Road, New Delhi-110 005.
7. M.C. Kuchhal : Modern Indian Company Law; Shri Mahavir Book Depot, 2603,
Nai Sarak, Delhi-110 006.
8. H.K. Saharay : Company Law; Universal Law Publishing Co., C-FF-1A, Dilkhush
Industrial Estate, G.T. Karnal Road, Delhi. -110033.
References:
1. D.K. Jain : Company Law Ready Reckoner; Bharat Law House Pvt. Ltd.; T-
1/95, Mangolpuri Industrial Area, Delhi-110083.
2. R. Suryanarayanan : Company Law Ready Reckoner; Commercial Law Publishers,
151, Rajinder Market, Opp. Tis Hazari Court, Delhi-110054.
3. Palmer : Company Law (Vol. 1); Stevens & Sons Ltd., London.
4. L.C.B. Gower : Principles of Modern Company Law; Stevens & Sons Ltd.,
London.
5. Taxmann’s : Circulars & Clarifications on Company Law; Taxmann, 59/32, New
Rohtak Road, New Delhi-110 005.
6. Bare Act : Corporate Laws; Taxmann, 59/32, New Rohtak Road, New Delhi-
110 005.
The Companies Act, 1956; Universal Law Publishing Co., C-FF-
1A, Dilkhush Industrial Estate, G.T. Karnal Road, Delhi. -110 003.
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Journals:
1. Chartered Secretary : ICSI, New Delhi
2. Student Company : ICSI, New Delhi
Secretary
3. Corporate Law Adviser : Corporate Law Advisers, 613, Metro View Apt., Sector 13, Pocket
B, Dwarka, New Delhi-110075.
4. Company Law Journal : Company Law Journal (India) Pvt. Ltd., 53/15, Old Rajinder
Nagar, Post Box No. 2844, New Delhi-110060.
Note: The latest edition of all the books referred to above should be read.
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ARRANGEMENT OF STUDY LESSONS

PAPER 1: COMPANY LAW (100 Marks)

Lesson No. Subject

1 INTRODUCTION
2 TYPES OF COMPANIES
3 PROMOTION AND INCORPORATION OF COMPANIES
4 MEMORANDUM OF ASSOCIATION AND ARTICLES OF ASSOCIATION
5 CONTRACTS AND CONVERSIONS
6 CONCEPT OF CAPITAL AND FINANCING OF COMPANIES
7 ALTERATION OF SHARE CAPITAL
8 PROSPECTUS
9 DEBT CAPITAL
10 CREATION AND REGISTRATION OF CHARGES
11 ALLOTMENT AND ISSUE OF CERTIFICATES
12 MEMBERSHIP IN A COMPANY
13 TRANSFER AND TRANSMISSION OF SECURITIES
14 INSTITUTION OF DIRECTORS
15 POWERS AND DUTIES OF DIRECTORS
16 MANAGING DIRECTOR, WHOLE-TIME DIRECTOR AND MANAGER
17 COMPANY SECRETARY
18 MEETINGS
19 INTERCORPORATE LOANS AND INVESTMENTS
20 DEPOSITS
21 ACCOUNTS AND AUDIT
22 DIVISIBLE PROFITS AND DIVIDENDS
23 SOLE SELLING AND SOLE BUYING AGENTS
24 BOARD’S REPORT AND DISCLOSURES
25 REGISTERS, FORMS AND RETURNS
26 INSPECTION AND INVESTIGATION
27 MAJORITY RULE AND MINORITY RIGHTS
28 MERGER, DE-MERGER, AMALGAMATION, COMPROMISE AND
ARRANGEMENTS – AN OVERVIEW
29 PRODUCER COMPANIES
30 LIMITED LIABILITY PARTNERSHIPS
31 APPLICATION OF COMPANY LAW TO DIFFERENT SECTORS
32 OFFENCES, PENALTIES AND THEIR COMPOUNDING
33 WINDING UP OF COMPANIES
34 STRIKING OFF NAME OF COMPANIES
35 AN INTRODUCTION TO E-GOVERNANCE AND XBRL
36 SECRETARIAL STANDARDS
TEST PAPERS