SEMESTER V
CORPORATE LAW - I
INTRODUCTION
Corporate form of ownership is the most important form of ownership of business in
the contemporary times. Its significance is due to many distinct advantages it has over other
forms of ownership of business. In order to regulate various aspects of functioning of
companies, the Company Act was enacted in the year 1956. It had been the lengthiest piece
of legislation ever passed by the Indian Parliament. But now we have an entire new piece of
legislation in front of us in the form of Companies Act 2013. To make it more contemporary
and relevant to the present corporate regieme, regulators and other stakeholders in India
were trying to make few changes in the 1956 Act. As a result of that, the Companies Bill, 2009
was introduced in the Lok Sabha, one of the two Houses of Parliament of India, on 3 August
2009. This Companies Bill, 2009 was referred to the Parliamentary Standing Committee on
Finance, which submitted its report on 31 August 2010 and was withdrawn after the
introduction of the Companies Bill, 2011. The Companies Bill, 2011 was also considered by
the Parliamentary Standing Committee on Finance which submitted its report on 26 June
2012. Subsequently, the Bill was considered and approved by the Lok Sabha on 18 December
2012 as the Companies Bill, 2012 (the Bill). The Bill was then considered and approved by the
Rajya Sabha too on 8 August 2013. It received the President’s assent on 29 August 2013 and
has now become the Companies Act, 2013. The changes in the 2013 Act have far-reaching
implications that are set to significantly change the manner in which corporates operate in
India. The new Act is more concise, relevant and more responsive to the current scenario.
The emphasis in this course is on the fundamental principles of law relating to basics of
Corporate Law covering topics right from the pre-incorporation to the establishment and
management of a company.
DETAILS OF THE COURSE OUTLINE
MODULE I. COMPANY AS A MEDIUM OF BUSINESS
Company, as a form of ownership, developed in order to address the requirement of
business at that time. It is a statutory creation and it has different forms to suit different
requirements of business and trade. Law recognize veil by dissociating members from
company and also the grounds on which corporate veil may be lifted.







History of Company Legislation - UK and India
Corporate personality – Concept
Nature and Features of a Corporate Body
Theories of corporate personality.
Lifting of corporate veil
Classification of company
Company as distinguished from other forms of business
MODULE II. PRE-INCORPORATION PHASE
Being statutory creations, companies are created by promoters. Promoters play a very
strategic role. It is through their expertise and efforts that a company is born. In cotemporary
times, task of promotion has professionalized. Law has the task of balancing the protection of
their interests on the one hand and on the other hand to protect the interest of the company.
Further it maintains sanctity of contracts entered into by promoters.





Promoters: Promotion of company
Promoters: Legal Position of a Promoter
Promoters: Duties and Liabilities
Procedure for Registration
Pre-incorporation contracts
MODULE III. INCORPORATION OF A COMPANY
A company is incorporated upon its registration. Registration confers many
advantages on the company. Both MoA (constitution of the company) and AoA (rules for
internal functioning) are necessary for getting a company registered. Moa contains the
fundamental conditions upon which the company is allowed to be incorporated. The three
common law doctrine protects the interest of different stakeholders involved.






Memorandum of Association
Doctrine of Ultra Vires
Articles of Associations
Doctrine of Indoor Management
Doctrine of Constructive Notice
Incorporation and its consequences on Corporate Transactions
o Certificate of Incorporation
o Certificate of Commencement
MODULE IV. PROSPECTUS
A company is bound to raise finances for its sustenance and growth. Therefore, in
finance a prospectus is a disclosure document that describes a financial security for potential
buyers. A prospectus commonly provides investors with material information about
different securities, mutual funds, stocks, bonds and other investments. It also provides with
information like description of the company's business, financial statements, biographies of
officers and directors, detailed information about their compensation, any litigation that is
taking place, a list of material properties and any other material information.
 Prospectus – Meaning, Issue and Contents.
 Kinds of Prospectus – Abridge Prospectus, Statement in lieu of Prospectus; Shelf
Prospectus, Deemed Prospectus.
 Mis-statements in a Prospectus, Scope of Untrue Statement
 Liability of Mis-statements in Prospectus
MODULE V. RAISING OF CAPITAL
In order to finance its activities the company needs capital. Capital of a company is of
different kinds. Capital can be raised at the time of formation of the company for starting a
business or later on, for expansion and diversification. But once raised it becomes the
permanent liability of the company. And such capital is raised by issuing prospectus in the
market which arouses interest of the investors in the company and it induces them to invest
in the company. It may be generated through different means from various sources (e.g.
public and private).

Shares / Share Capital –
o Meaning and Nature
o Kinds of Shares
o Issue of shares – IPO, Rights issue, Bonus Issue
o Allotment, Transfer, Forfeiture, Surrender of shares
o Membership of company: modes of acquisition, eligibility; liability; Rights;
Cessation of Membership;
o Alteration & Reduction of share capital.

Debenture / Debt Capital –
o Concept, Meaning & Characteristics
o Shareholder vis-à-vis Debenture holder
o Kinds of Debentures
o Debenture Trustees, Debenture Trust Deed, Debenture Stock

Dividend –
o Meaning
o Sources of declaration
o Interim Dividend
MODULE VI. CORPORATE MANAGEMENT (MEETINGS)
Protection of the investors is one of the primary objectives of Corporate Law. One of
the forum through which such an objective is fulfilled are the meetings of a company and the
business is also transacted through these different kinds of meeting. Their procedure is well
regulated through law. It is at the meeting that majority and minority friction comes out in
the open.
 Meetings - Meaning and Need
 Requisites of a Valid meeting
 Kinds of Meeting
o General Body Meetings
o Board Meetings
 Voting
BOOKS TO BE REFERRED










Ramaiyya, Guide to Companies Act, 1956
Charlesworth & Morse, Company Law
Gower & Davies, Principles of Modern Company Law
K. Majumdar, Dr. G. K. Kapoor Company Law & Practice, Taxman
T P Gosh, Companies Act 2013, Taxman
Pennington, Company Law
Palmer, Company Law
Taxman’s Master Guide to Companies Act 2013
Nicholas Bourne, Principles of Company Law
Avtar Singh, Company Law
STATUTES & SEBI REGULATIONS TO BE REFERRED






Companies Act 2013
Companies Act, 1956
Securities and Exchange Board of India Act, 1992
(Issue of Capital and Disclosure Requirements) Regulations, 2009
Depositories Act, 1996
Securities Contract Regulation Act, 1956
CASES TO BE REFERRED





Saloman v. Saloman & Co. Ltd.(1895-99)AllER Rep.33
Lee v. Lee;s Air Farming Ltd.(1960)3 AllER 420
Dhulia – Amalner Motor Transport Ltd v. R.R. Dharamsi AIR 1952 Bom. 337:
Daimler Co. Ltd. v. Continental Tyre & Rubber Co. Ltd. (1916-17) AllER Rep. 191
Bacha F. Guzadar v. CIT Bombay AIR 1955 SC 74
















Gilford Motor Co. Ltd. v. Horne (1933) AllER 109
Workman v. Associates Rubber Industry Ltd. (1985) 4 SCC 114
Pratap Singh v. Bank of America (1976)46 Com. Cases 532
Babulal Chaukhani v. Caltex (India) Ltd. AIR 1967 Cal 205
Macaura v. Northern Assurance Co. Ltd, 1925 AC 619 HL
Minerva Mills Ltd. v. Govt. of Maharashtra (1975) 45 Com. Cases 1
Orient Paper Mills Ltd. v. State of Orissa AIR 1957 Orissa 232
Rank Film Distributors v. ROC AIR 1967 Cal 32
In re, Machinon Macknize & Co. (1967) ComLJ 200
Bell Houses Ltd. v. Citywall Properties Ltd. (1966) 2 AllER 674
A.L. Mudaliar v. LIC AIR 1963 SC 1185
Royal British Bank v. Turquand (1943-60) AllER Rep.435
Freeman v. Buckhurst Park Properties (1964)1AllER 630
Regal (Hasting) Ltd. v. Gulliver (1942) 1 AllER 378
Percival v. Wright (1902) 2 CH 421
Industrial Development Consultants Ltd. v. Cooley (1972) 2 AllER 162
Note:
1. The students are required to take both the two Acts (the 1956 and the 2013) into consideration at
the time of preparation.
2. Apart from the cases that have been mentioned above, the students are also advised to take note of
the other cases mentioned in the books and discussed in the class.