Generally, a person who is unable to meet his debts or obligations is known as insolvent. Insolvency pertaining to a company refers to a company’s inability to pay off its debts. Further, when one of the creditors files a lawsuit in court and stops the individual actions by creditors, this is known as insolvency proceedings. In a petition involving insolvency, it is important to mention all the acts of insolvency, commissioned by the borrower. Until the act of insolvency is clearly mentioned in the petition, no order of adjudication can be passed.
Foreign direct investment is governed by company law in India. At a basic level, it comes into effect when a company from one country makes a physical and monetary investment into building a factory or office in another country. The investment involves many other factors as well.
As professionals, we are aware about the various schemes introduced in the past. These company laws include the simplified exit scheme 2003 and simplified exit scheme 2005, relating to striking off the names of the company from the Register of Companies as defunct companies. Despite those schemes, many companies did not show any interest in filing their due documents promptly with the Registrar of Companies as no business operations / activities were/are carried on by them. For those companies, it is a golden opportunity for getting their names strike off from the Register of Companies at no cost except minimal documentation expenses.
As per section 581-A (l), of the Companies Act, 1956, a company is known as a Producer Company, if it is registered under the Companies Act, 1956, as a Producer Company.
Further the Act, provides that a corporation is referred as Producer Company only, if it has the objects as provided under the section 581-B (1), of the Act.
The affairs of establishing and working of a company in India is governed by the prevailing company laws as given in the Companies Act, 1956. A new form of company, which is called as a Producer Company is recognized under the Companies Act, 1956, since 2002.
The few basic features of a Producer Company are:
Every member of a company whose name is mentioned in the company’s Register of Members is entitled to receive a share certificate or certificate share. Share certificates acts as an evidence for the shares of a shareholder in the company. The certificates of shares shall bear the company seal, the amount paid, the name of the shareholder, and must specify the related shares. It shall also bear the signatures of minimum of two directors and the company secretary.
All activities, starting from the formation to liquidation of a company are governed by the Companies Act, 1956. The final stage of liquidation of a company is called dissolution. Dissolution or winding-up of a company is the process by which the existence of a company is brought to an end. A company that has been dissolved ceases to exist as a separate legal entity.
Under Sec. 408 of the Companies Act, 1956, the Central Government of India possesses special powers to reduce oppression and mismanagement in a company. As per Sec. 397 and 398, a certain number of members can lodge a complaint and ask for relief against oppression and mismanagement.
A company is considered a separate legal entity, although it has no physical existence and works through a human agency. The individuals who form and run a company are known as its members. The terms shareholder and member of a company can be used interchangeably, except for an unlimited company or company limited by guarantee which may not have a share capital. The laws of forming and running a company in India are governed by the Companies Act, 1956.
In a company, the majority of shareholders always have an edge over the minority. It is often noticed that when a person gets hold of a majority of the shares of a company, he may run the company to fortify individual interests rather than safeguard the interests of all the shareholders in the company. A company and its board of directors should have total clarity about the rights of the majority and minority shareholders. Also, complying with company law will ensure its smooth functioning.