DEEKSHITH KUMAR PUTTUR

Share capital of a company refers to the amount invested in the company for it to carry out its operations. In other words it refers to the amount of capital raised or to be raised by a company though the issue of shares. A share is the interest of a member in a company.  According to Section 2(84) of the Companies Act, 2013 “share” means a share in the share capital of a company and includes stock. It represents the interest of a shareholder in the company, measured for the purposes of liability and dividend. It attaches various rights and liabilities. A share is the smallest unit into which the company's capital is divided, representing the ownership of the shareholders in the company. A stock on the other hand is a collection of shares of a member that are fully paid up. Kinds of Shares As per the Section 43 of Companies Act, 2013, a company can issue only two types of shares.  1. Equity Share Capital [Section 43(i)] All share capital which is NOT preferential share capital...

Doctrine of Constructive Notice Constructive notice is the legal fiction hat signifies that a person or entity should have known, as a reasonable person would have, of a legal action taken or to be taken, even if they have no actual knowledge of it.  In companies law the doctrine of constructive notice is a doctrine where all persons dealing with a company are deemed (or "construed") to have knowledge of the company's articles of association and memorandum of association. Section 399 of the Companies Act, 2013 provides that any person can inspect by electronic means any document kept by the Registrar, or make a record of the same, or get a company or extracts of any documents including the certificate of incorporation of any company by payment of prescribed fees. This section  confers the right to inspection to all documents of companies.  Office of the Registrar is a public office The memorandum and article are open and accessible to all. It is the duty of every person d...

The doctrine of ultra vires is a fundamental law of the Indian Companies Act. ‘Ultra’ means ‘beyond’, ‘Vires’ means ‘Powers’. It lays down that if any act of the company or any contract entered into by the directors, on behalf of the company, is beyond powers vested in the directors and company by object clause of the Memorandum of Association is considered as void, and it does not create any legal relationship. In other words,  Ultra Vires of a company means that the act is beyond the legal powers and authority of the company. This fundamental law is to protect Investors in the company so that they may know the objects in which their money is to be employed and  to protect Creditors by ensuring that funds are not wasted in unauthorised activities. It need not necessarily illegal; it may be or may not be.  Company should not be fined or punished for its acts or of its agents.  If it exceeds its authority, it is good up to the extent of authority and bad as to th...

Telephone banking is a service provided by a bank or other financial institution, that enables customers to perform over the telephone a range of financial transactions which do not involve cash or Financial instruments (such as cheques), without the need to visit a bank branch or ATM. One of the most convenient banking services provided by the majority of the banks and financial institutions. It has made life easy as account holders can initiate transactions as well as complete some of the transactions. Customers can enjoy the flexibility of time with 24-hour phone banking service. The account holder can enquire about account balance, make bill payments, transfer funds to another account and do much more with this facility. To use this facility, customer may not require internet facility, instead just having calling facility in the phone is enough. How to get Phone Banking facility? It is important to register the mobile number with the bank to use the phone banking service. Once regi...

An Automated Teller Machine (ATM) cash machine (in British English) is a computerized telecommunications device and real-time system that provides the clients of a financial institution with access to their bank accounts in a public space without intervention administration of financial institution. To use an automatic teller machine, clients must have a plastic ATM card with a plastic smart card with a chip or a magnetic stripe, which contains a unique card number and some security information about the client. The customer is identified by inserting plastic ATM card and entering a personal identification number (PIN)for the customer. History of ATM The first ATM turned up at a Barclays Bank branch in London in 1967, though there are records of a cash dispenser in Japan in the mid-1960s. The interbank transaction that allowed a customer to use one bank’s card at another bank’s ATM in the 1970s. Currently, more than 3.5 million ATMs are in operation worldwide. History of ATM in I...

The Articles of Association or AOA are the legal document that along with the memorandum of association serves as the constitution of the company. It is comprised of rules and regulations that govern the company’s internal affairs. The articles of association of a company and its bye laws are regulations which govern the management of its internal affairs and the conduct of its business. As per Section 2(5) of the Companies Act,2013 “articles” means the articles of association of a company as originally framed or as altered from time to time or applied in pursuance of any previous company law or of this Act. They are framed in order to carry out the aims and objects as set out in the Memorandum of Association. While the MOA lays down the external boundaries, AOA laydown the guidelines within the boundaries. The Articles are next in importance to the MOA which contains the fundamental conditions upon which alone a company is allowed to be incorporated. As per Section 5 of the Act, it sh...

Formation of a company involves certain processes like. Incorporation Promotion Raising Capital Commencement of business Incorporation of a Company Before forming a company, certain preliminary and key decisions need to be taken about the business. Theses decisions are usually done by a person known as ''Promoter'. Promoter will do all the necessary work incidental to the formation of a company. Section 3 of the Companies Act, 2013 deals with the Mode of Forming Incorporated Company.  Procedural aspects with regard to Incorporation 1. Application for Availability of Name of company As per section 4(4) a person may make an application, in such form and manner and accompanied by such fee, as may be prescribed, to the Registrar for the reservation of a name set out in the application as (a) the name of the proposed company; or  (b) the name to which the company proposes to change its name. 2. Preparation of Memorandum and Articles of Association Before filing the documents and...

Meaning of Depreciation It refers to a decrease in the value of assets by wear and tear, caused by their use in the business over a period of time. Its cost is spread over its anticipated life by charging depreciation every year against the profits of the business. Conditions for allowance of depreciation. The asset must be owned by the assesse. It must be used for the purpose of business or profession. It must be used in the relevant accounting year. Assets eligible for depreciation A. Tangible Assets:  Buildings, Machinery, Plant and furniture B. Intangible Assets:  Know-how, Patents, Copyrights, Trademarks, Licences, Franchises or any other commercial rights of similar nature. Other assets like Investments, goodwill  etc., do not qualify under this category. Buildings means only superstructure and does not include the land on which it is constructed. Plants includes ships, vehicles, books, scientific apparatus and surgical equipment used for the purpose of business or...

In order to incorporate a company, there must be a person who initiates the idea of entity. So the,  the first persons who control a company’s affairs are its promoters.   He is a person who does the necessary preliminary work incidental to the formation of a company.  He is a person who identifies a business opportunity or idea, analyses its prospects, and takes steps to implement it. According to [Sec. 2(69)] Companies Act 2013, Promoter means a person  a) Who has been named as such in a prospectus or is identified by the company in the annual return referred to in Section 92; or b) Who has control over the affairs of the company, directly or indirectly, whether as a shareholder, director or otherwise or c) In accordance with whose advice, directions or instructions the Board of Directors of the company is accustomed to act. However, if he is acting in a professional capacity, he shall not be treated as Promoter. According to Justice C Cockburn, Promoter is "one wh...

One of the important characteristics of the company is that the company is distinct form its members. This principle is known as "the veil of incorporation". The corporate veil protects the members from the liability of the company. It is a statutory privilege and it must be used for legitimate business purposes only. If it is used for any fraudulent or dishonest purpose, the court will breakthrough, this shelter of separate legal personality and and apply the principle/doctrine of what is called as “lifting of or piercing the corporate veil”. In this action, the court will look at the persons behind the company who are the real beneficiaries of corporate fiction. Cases in which the corporate veil has been lifted: 1. For protection of revenue The court will allow piercing of corporate veil if it is of the opinion that the company has been formed for evading the tax or to, circumvent tax obligations. If such is the case, the court will disregard the corporate entity and would ...

Meaning It refers to the ascertainment of marginal cost by differentiating between fixed and variable cost. It is a technique in which only variable costs are taken into account for purposes of product costing, inventory valuation and other allied important management decisions. It is developed to overcome the deficiencies of absorption costing. It is also known as variable costing. Definition J Batty defines, Marginal costing as, "a technique of cost accounting which pays special attention to the behavior of costs with changes in the volume of output” According to ICMA, London , “the ascertainment of marginal costs and of the effect on profit of changes in volume or type of output by differentiating between fixed costs and variable costs”. ICMA, London defines Marginal Cost as, “the amount at any given volume of output by which the aggregate costs are changed if the volume of output is increased or decreased by one unit”. It is a variable cost of one unit of a product or a servi...