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Kinds of CompaniesDistinguish Between Partnership Firm and CompanySale and Agreement To Sell
Prepared By:Prairna Gupta-55Neha Phool-53Priyanka Gupta-54Nirmal KaurShivanshi Sethi-57
Mba(IB)-I
MEANING OF COMPANY
A company is an artificial person created by law. It is a voluntary association of individuals for profits.
DEFINITION AS PER THE ACT
According to Section 3(1)(i) of the Companies Act, a company means, “ A company formed and registered under this Act or an existing company.”
Companies
Incorporated
Chartered Companie
s
Statutory Compani
es
Registered
Companies
Companies limited by shares
Public
Private
Companies Limited
By GuaranteeP
ublic
Private
Unlimited Companies P
ublic
Private
Unincorporated
Incorporated Companies: These are the association of persons who contribute money to a common stock known as capital of the company. They have existence independent of its members.
Unincorporated Companies: These are the mere collection of persons who have agreed to join in partnership to run a business and share the profits.
Chartered Companies: The ‘Crown’ in the exercise of the royal prerogative has power to create a corporation by the grant of a charter to persons assenting to be incorporated. Such companies or corporations are known as chartered companies.
Statutory Companies: A company may be incorporated by means of a special Act of the Parliament or any State Legislature. Such Companies are called statutory companies. Such companies are generally formed to carry out some special public undertakings, e.g., railways, waterways, gas, electric generation etc. They are governed by the Acts creating them.
Registered Companies:Companies registered under the Companies Act,1956, or the earlier Companies Acts are called registered companies. Such companies come into existence when they are registered under the Companies Act and a Certificate of Incorporation is granted to them by the Registrar.
A company registered under the Act may be:
i. Companies limited by shares: In a company limited by shares the liability of the members is limited by the memorandum to the amount, if any, unpaid on the shares respectively held by them.
ii. Companies limited by guarantee: It is a registered company public or private, in which the liability of members is limited to such amounts as they may respectively undertake by the memorandum to contribute to the assets of the company in the events of its being wound up.
iii. Unlimited Companies: A company not having any limit on the liability of its members is termed as unlimited company.
Private company: According to Section 3(1)(iii) of the Companies (Amendment)Act,2000, a private company means a company which:
(a) has a minimum paid up capital of one lakh rupees or such higher amount as may be prescribed by the Government;
(b) has a minimum of 2 and maximum of members excluding employees;
(c) restricts the right of members to transfer its shares , if any;
(d) prohibits any invitation to the general public to subscribe for its shares or debentures;
(e) does not invite the public to subscribe to its deposits.
E.g.:- Ambika Industries Pvt. Ltd., Paras Pharmaceutical Pvt. Ltd. etc.
Public Company: According to Section 3(1)(iv) of the Companies (Amendment)Act,2000, a public company means a company which:
(a) is not a private company; and (b) has a minimum paid up capital of five
lakh rupees or such higher amount as may be prescribed by the Government.
E.g.:-Reliance Industries Ltd., Tata Iron & Steel Co. Ltd., D.C.M. Ltd., etc.
Besides all these companies there are few more kinds of Companies:
Government Companies: It is a company of which 51% or more equity share capital is held by the Government. Rest of the shares can be held by private individuals or businessmen.
Foreign Companies: It is incorporated outside India but has a place of business in India. Some of the popular MNCs operating in India are Coca Cola(USA), Pepsi Cola(USA), Sony(Japan),etc.
DISTINCTION BETWEEN PARTNERSHIP AND COMPANY
Regulating Act
PARTNERSHIP FIRM COMPANY
Indian Partnership Act,1932
Companies Act, 1956
Number of Members
PARTNERSHIP FIRM COMPANY
Minimum-2 Maximum-20 in
ordinary business and 10 in banking business
Private Company: Minimum-2,
Maximum-50 Public Company: Minimum-7,
Maximum- No. of shares divided by the lot of minimum number of shares
Separate Entity
PARTNERSHIP FIRM COMPANY
No separate legal entity from that of its partners.
Separate legal entity from that of its members.
Liability
PARTNERSHIP FIRM COMPANY
Unlimited Limited
Management
PARTNERSHIP FIRM COMPANY
All partners are entitled to participate.
Only members of the Board of Directors are entitled to manage.
Transfer of Interest
PARTNERSHIP FIRM COMPANY
Not possible without the consent of all the partners.
Freely transferable except in case of private company.
Financial Resources
PARTNERSHIP FIRM COMPANY
Can raise limited resources.
Can raise large financial resources.
Winding up
PARTNERSHIP FIRM COMPANY
Can be dissolved at will without any legal formalities
Cannot be wound up at will. Winding up regulated as per provisions of the Companies Act.
A CONTRACT OF SALE OF GOODS IS A CONTRACT WHEREBY THE SELLER TRANSFERS OR AGREES TO TRANSFER THE PROPERTY IN GOODS TO THE BUYER FOR A PRICE.
THE TERM “ CONTRACT OF SALE “ IS A GENERIC TERM AND INCLUDES BOTH A SALE AND AN AGREEMENT TO SELL.
SALE AND AGREEMENT TO SELL
WHERE UNDER A COTRACT OF SALE, THE PROPERTY IN GOODS IS TRANSFERRED FROM
THE SELLER TO THE BUYER , THE CONTRACT IS CALLED “SALE”.
WHERE THE TRANSFER OF THE PROPERTY IN GOODS IS TO TAKE PLACE AT A FUTURE TIME
OR SUBJECT TO SOME CONDITIONS THEREAFTER TO BE FULFILLED , THE CONTRACT IS CALLED “AN AGREEMENT TO SELL”
CONSEQUENCES OF BREACH IN A SALE ,IF THE BUYER FAILS TO PAY THE
PRICE OF THE GOODS THEN THE SELLER CAN SUE FOR THE PRICE
WHILE IN AN AGREEMENT TO SELL IF THERE IS A BREACH OF CONTRACT BY THE BUYER , THE SELLER CAN ONLY SUE FOR THE DAMAGES.
RIGHT TO RE –SELL IN A SALE , THE SELLER CANNOT RE –SELL
THE GOODS WHILE IN AN AGREEMENT TO SELL , IN CASE OF RE-SALE ,THE BUYER WHO TAKES THE GOODS FOR CONSIDERATION AND WITHOUT NOTICE OF THE PRIOR
AGREEMENT GETS A GOOD TITLE.
GENERAL AND PARTICULAR PROPERTY A SALE IS A CONTRACT PLUS CONVEYANCE AND
GIVES RIGTH TO THE BUYER TO ENJOY THE GOOD WHILE IN AN AGREEMENT TO SELL IS MERELY A CONTRACT , PURE AND SIMPLE
INSOLVENCY OF BUYER IN A SALE IF THE BUYER BECOMES INSOLVENT
BEFORE HE PAYS FOR THE GOODS , THE SELLER MUST RTURN THEM TO THE ASSIGNEE WHILE IN AN AGREEMENT TO SELL IF THE BUYER BECOMES INSOLVENT SELLER IS NOT BOUND TO PART WITH THE GOODS UNTIL HE IS PAID FOR.
INSOLVENCY OF SELLER IN A SALE ,IF THE SELLER BECOMES INSOLVENT , THE
BUYER BEING OWNER OF THE GOOD IS ENTITLED TO RECOVER THE GOODS FROM ASSIGNEE WHILE IN AN AGREEMENT TO SELL, IF THE BUYER WHO HAS PAID THE PRICE , FINDS THAT THE SELLER HAS BECOME INSOLVENT , HE CAN ONLY CLAIM AA RATEABLE DIVIDEND.
Thank You!