Business Organizations and Corporate Governance

A company enjoys a separate legal entity with perpetual succession and common seal. It can acquire the property in its own name. It can sue and be sued and can enter into contracts in its own name.

An injunction is an order of a Court restraining a person from doing a particular act. It is a mode of securing the specific performance of a negative term of the contract, (i.e., where he is doing something which he promises not to do), the Court may in its discretion issue an order to the defendant restraining him from doing what he promised not to do.

Reliance Ltd. is a Public Limited Company. East India Company is an example of Chartered Company. Rotary Club is non-profit organization.

Some of the features are:

1. Generally financed by the central or state government
2. Can borrow funds from the public and government organisation through statutory sources
3. Have separate legal entity
4. Have to frame their own policies and procedures within the scope of state legislature
5. Providing better services to public and make adequate profit.
6. Autonomous in their functioning thus they enjoy operation flexibility.
7. Can recruit & appoint their employee with their service condition, since they are corporate body.
8. Have to follow the special statute strictly.
9. Less government interference in matters of the corporation
10. Limited liability of the members of the corporation

Thus, only (i) and (iii) are true. 

A person shall be disqualified for being Chairman who is appointed on a whole-time basis as a Managing Director, if he––

(a) is a director of any company other, than a company referred to in the proviso to sub-section 

(b) is a partner of any firm which carries on any trade, business or industry

(c) has substantial interest in any other company or firm

(d) is a director, manager, managing agent, partner or proprietor of any trading, commercial or industrial concern

(e) is engaged in any other business or vocation.

As stipulated under Section 58(2) of the CA13, the shares of a public company are freely transferrable.

Private trusts are governed by the Indian Trusts Act, 1882. This Act is applicable to the whole of India, except the State of Jammu and Kashmir and the Andaman and Nicobar Islands.

A charge created by a company is required to be registered with the Registrar within thirty days of its creation in such form and on payment of such fees as may be prescribed.

When a company is wound up by the members or the creditors without the intervention of the tribunal, it is called as voluntary winding up. It may take place by the passing of an ordinary resolution in the general meeting if 

1. the period fixed for the duration of the company by the articles has expired 
2. some event, on the happening of which the company is to be dissolved, has happened

Unlike the partnership firm, a company does not have unlimited liability on its members. The liability of members is limited. 

Excercising the powers conferred by sub-section (1) of Section 11 of the Credit Information Companies (Regulation) Act, 2005, Reserve Bank of India, being satisfied that it is necessary and expedient in the public interest, hereby directs that within three months from the date of this directive: (i) All Credit Institutions (CIs) shall become members of all CICs and submit data (including historical data) to them. Further, CICs and CIs shall keep the credit information collected/maintained by them, updated regularly on a monthly basis or at such shorter intervals as may be mutually agreed upon between the CI and the CIC in terms of Regulation 10 (a) (i) and (ii) of the Credit Information Companies Regulations, 2006. (ii) As a consequence of (i) above, one-time membership fee charged by the CICs, for CIs to become their members, shall not exceed Rs. 10,000 each. The annual fees charged by the CICs to CIs shall not exceed Rs. 5000 each.

In law, a liquidator is the officer who is appointed when a company goes into winding-up or liquidation and who has responsibility for collecting in all of the assets of the company and settling all claims against the company, before putting the company into dissolution.

Section 141 of the NI Act makes the directors, manager, secretary and other officers of the companies liable if the offence is committed because of negligence on their part. The director must be, at the time of commission of offence, in-charge and responsible for the conduct of the business of the company. Section 141 does not make all the directors liable for the offence. 

Merger is a statutory combination of two or more corporations by the transfer of the properties to one surviving corporation. 

Borrowing powers of the Board are under section 180 of the Companies Act, 2013. Section 180 is applicable to all companies, i.e. public as well as private. So, w.e.f. 12th September, 2013 onwards, even private companies have to seek the approval of their members if they are intending to borrow monies in excess of their paid up share capital and free reserves.