Question

A company registered under the companies act has certain privileges. Some cases of the registration of bogus companies are reported where in reality companies exist only on paper not on ground. Write the privilege that the registered companies posses. Explain the process of incorporation of the companies' suggesting the flawsloop holes in the registration process permitting registration of bogus companies. Suggest amendment to the Companies Act 2013 to eliminate the occurrence of such fraudulent registratio​

Answer 1

Answer:

Classification And Registration Of Companies

1. The Companies Act, 1956 broadly classifies the companies into private and public companies and provides for regulatory environment on the basis of such classification. However, with the growth of the economy and increase in the complexity of business operation, the forms of corporate organizations keep on changing. There is a need for the law to take into account the requirements of different kinds of companies that may exist and seek to provide common principles to which all kinds of companies may refer while devising their corporate governance structure. Rigid structures, unnecessary controls and regulations inhibit the risk taking initiatives of the entrepreneurs. Private companies and small companies, who do not generally go for public issues or deposits for their financial requirements but utilize their personal or in-house resources, need to be given flexibility and freedom of operation and compliance at a low cost. Equally, public companies that access capital from public need to be subjected to a more stringent regime of corporate governance. To enable a comprehensive framework for different forms of corporate organizations, the Company Law should ensure multiple classifications of companies. It should also enable smooth change-over of companies from one type to another.

Classification of Companies

2. The corporate form can take many shapes in order to respond efficiently to the environment. Company Law should therefore recognize a multiple classification of companies. The Committee indicates the criteria for classification on the basis of the forms discernible today, but recognizes that such classification can never be exhaustive.

i) On the basis of size: a) Small companies b) Other companies

ii) On the basis of number of members: a) One person company b) Private companies c) Public companies

iii) On the basis of control: a) Holding companies b) Subsidiary companies c) Associate companies

iv) On the basis of liability: a) Limited (I) by Shares (II) by Guarantee (with or without share capital) b) Unlimited

v) On the basis of manner of access to capital: a) Listed companies b) Un-listed companies

Answer 2

Explain the process of incorporation of the companies' suggesting the flawsloop holes in the registration process permitting registration of bogus companies :

• The objectification of a company refers to the legal process that's used to form a commercial reality or a company.
• An incorporated company is a separate legal reality on its own, honoured by the law.
• These pots can be linked with terms like‘Inc’or‘ Limited’in their names.
• It becomes a commercial legal reality fully separate from its possessors.
• A group of seven or further people can come together to form a public company whereas, only two are demanded to form a private company.
• The following way is involved in the objectification of a company
• The first step in the objectification of any company is to choose an applicable name.
• A company is linked through the name it registers.

#SPJ3