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COMPANY LAW

BUSINESS LAW V

SEMESTER-

COMPANY LAW
Maruti Suzuki India Ltd. Vs Meghna Automotives Pvt. Ltd.

SUBMITTED BY
AAKANKSHA JHA V Semester BBM

Date of Submission: 21st July, 2011

COMPANY LAW

CONTENTS
I. Introduction

II. Definitions and Meanings III. Documentation and Processes IV. Types of Public and Private Companies V. Legal Limitations and Liabilities VI. Transition VII. Who Has An Edge Over Whom? VIII. Practical Comparison IX. Conclusion X. Bibliography and Annexure
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COMPANY LAW

INTRODUCTION
Core company law is concerned with addressing three main sets of principal/agent problems. These arise out of the relationships between, first, the management and the shareholders as a class; second, between majority shareholders and minority shareholders; and, third, between the controllers of the company (whether managers or majority shareholders) and non-shareholder stakeholders. Company Law or Corporate law connotes law of corporation or companies. It regulates all matters, from the birth of companies to their dissolution. It involves the study of law that regulates the working of incorporated bodies. Corporate law does not restrict itself to the Companies Act only but applies to allied legislations as well. The Companies Act 1956 is an Act of the Parliament of India, enacted in 1956, which enabled companies to be formed by registration, and set out the responsibilities of companies, their directors and secretaries. Since its commencement, it has been amended many times, in which amendment of 1988, 1990, 1996, 2000 and 2011 are notable. The Company Law is essential from the legal, socio-ethical, and the general good point of view. It is required for the maintenance of status-quo, practice vested rights and protection of public interest. The first recognizable commercial associations were medieval guilds, where guild members agreed to abide by guild rules, but did not participate in ventures for common profit. The earliest forms of joint commercial enterprise under the lex mercatoria were in fact partnerships. The beginning of modern company law came when the two pieces of legislation were codified under the Joint Stock Companies Act 1856, in England at the behest of the then Vice President of the Board of Trade, Mr Robert Lowe. That legislation shortly gave way to the railway boom, and from there the numbers of companies formed soared. In the later nineteenth century depression took hold, and just as company numbers had boomed, many began to implode and fall into insolvency. Much strong academic, legislative and judicial opinion was opposed to the notion that businessmen could escape accountability for their role in the failing businesses. This remarked the beginning and revolution of the modern company law. Under the company law, we primarily look into the public and the private limited companies. These two types of companies are different as legal entities,
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COMPANY LAW

when it comes to formations, functioning, liabilities, structure, tax burden and dissolution. This paper attempts to understand and analyze the meaning of the company law and study it primarily under public and private companies. The meaning and definitions of the two terms, process of formation, organizational structure, legal obligations, and comparison of two real public and private entities enable us to have an overview of the various dimensions of the Company law.

We have compared Maruti Suzuki India Ltd. and Meghna Automotives Pvt. Ltd. as public and private company respectively. Maruti Suzuki India commonly referred to as Maruti, is a subsidiary company of Japanese automaker Suzuki Motor Corporation. It has a market share of 44.9% of the Indian passenger car market as of March 2011. Maruti Suzuki offers a complete range of cars from entry level Maruti 800 and Alto, to hatchback Ritz, A-Star, Swift, Wagon-R, Estillo and sedans DZire, SX4, in the 'C' segment Maruti Eeco, Multi Purpose vehicle Ertiga and Sports Utility vehicle Grand Vitara. It was the first company in India to mass-produce and sell more than a million cars. It is largely credited for having brought in an automobile revolution to India. It is the market leader in India, and on 17 September 2007, Maruti Udyog Limited was renamed as Maruti Suzuki India Limited. The company's headquarters are located in New Delhi. Meghna Automotives Private limited is a Bangalore based entity engaged in import and export of spare parts Light commercial vehicles. It is registered under and under Section 22 of the Karnataka Value Added Tax Act, 2003 for its tax liability. It is one of the leading Automobile Spare Parts exporters of Two & Three Wheeler Spares for Bajaj, APE & all spares for pickups like Mazda, Toyota, Nissan, Canter, Hino, Kia apart from Tata & Leyland to various countries like Singapore, Sri Lanka, Indonesia, Dubai & Kenya. A complete range of spares for "Chainsaws" like Stihl, Husquarna etc. - wood & grass cutting machines are available with them and are exported in huge quantities to Africa and Indonesia. World famous Bajaj Autorichshaw (Tuk Tuk 3 Wheelers) are also being exported by them.

COMPANY LAW

DEFINITIONS AND MEANINGS


Company law is a Legislation under which the formation, registration or incorporation, governance, and dissolution of a firm is administered and controlled. Company law is the field of law concerning companies and other business organizations. This includes corporations, partnerships and other associations which usually carry on some form of economic or charitable activity. The most prominent kind of company, usually referred to as a "corporation", is a "juristic person", i.e. it has separate legal personality, and those who invest money into the business have limited liability for any losses the company makes, governed by corporate law. The largest companies are usually publicly listed on stock exchanges around the world. Even single individuals, also known as sole traders may incorporate themselves and limit their liability in order to carry on a business. All different forms of companies depend on the particular law of the particular country in which they reside. A company that does not sell its shares to the general public (through a stock exchange). The transfer (sale) of shares in such a company is usually restricted in some way, such as by the requirement that the directors or shareholders of the corporation must approve any transfer of shares in advance of the sale. A private company is a business company owned either by no governmental organizations or by a relatively small number of shareholders or company members ( maximum 50 members) which does not offer or trade its company stock (shares) to the general public on the stock market exchanges, but rather the company's stock is offered, owned and traded or exchanged privately. Less ambiguous terms for a privately held company are unquoted company and unlisted company. A company that has issued securities through an initial public offering (IPO) and is traded on at least one stock exchange or in the over the counter market. Although a small percentage of shares may be initially "floated" to the public, the act of becoming a public company allows the market to determine the value of the entire company through daily trading. A public company, is a limited liability company that offers its securities (stock/shares, bonds/loans, etc.) for sale to the general public, typically through a stock exchange, or through market makers operating in over the counter markets.
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COMPANY LAW

Public companies, including public limited companies, can be either unlisted or listed on a stock exchange depending on their size and local legislation.

DOCUMENTATION & PROCESSES

After obtaining name approval from the ROC the following documents must be prepared to incorporate the company Memorandum of Association (MOA) Articles of Association (AOA) Form 1 providing details of promoters of the company Form 18 providing details of registered office of the company Form 32 providing details Directors of the company The Memorandum of Association is a document that sets out the constitution of the company. It contains, amongst others, the objectives and the scope of activity of the company and also describes the relationship of the company with the outside world.

The Articles of Association contain the rules and regulations of the company for the management of its internal affairs. While the Memorandum specifies the objectives and purposes for which the Company has been formed, the Articles lay down the rules and regulations for achieving those objectives and purposes. It also states the authorized share capital of the proposed company and the names of its first / permanent directors. Professional help is to be sought in the drafting of the MOA and AOA, as it contains the governing policies, rules and by-laws of the proposed venture. The draft must be carefully vetted by the promoters before printing and stamping. The MOA and AOA must be signed by at least two subscribers in his own hand, along with fathers name, occupation, address and the number of shares subscribed for and witnessed by at least one person. Then the MOA and AOA are required to be stamped & filed with the ROC. A stamp duty is required to be paid on the MOA and on the AOA. The stamp duty depends on the authorized share capital and varies between states. Details of applicable stamp duty can be obtained Govt. websites. eStamping facility is now available via MCAs portal. The document preparation process may take five to seven days. Submission of Documents Submit the following documents to the ROC with the filing fee and the registration fee:
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The stamped and signed Memorandum and Articles of Association (3 copies). Form-1, 18 & 32 in duplicate. Any agreement referred to in the Memorandum & Articles. Any agreement proposed to be entered into with any individual for appointment as Managing or whole time Director. Declaration of Compliance by an advocate or company secretary or chartered accountant or director, manager or secretary of the company Name availability letter issued by the ROC. Power of Attorney authorizing a person, on behalf of subscribers, any documents and papers filed for registration. The power of attorney should be given on Non-Judicial stamp paper of appropriate value and shall be submitted to the Registrar Online filing Within 30 days from the date of intimation of name clearance by the RoC, following documents are required to be filed online with RoC: 1. Declaration of compliance in Form No. 1 duly signed using DSC by a person named in the AoA as a director or manager or secretary of the company. 2. Situation of the registered office of the company in Form No. 18. 3. Particulars of Directors, Managers and Secretary in Form No. 32. 4. Duly signed and stamped MoA and AoA of the company. 5. Power of attorney in favour of M/s K R A & Co. to act as an authorized representative on behalf of promoters. 6. RoC Registeration fee. All these documents are required to be digitally signed by a Proposed Director of the Company and certified by counter signature of a Practicing Chartered Accountant or a Company Secretary.

COMPANY LAW

Manual Filing: Following documents shall be further required to be submitted manually with concerned office of RoC after online filing: 1. Form 1 (Declaration of Compliance on incorporation of the company) executed on a non-judicial stamp paper of appropriate duty amount. 2. Form 18 (Notice of situation of the registered office of the company). 3. Form 32 (Particulars of the first Directors of the company). 4. Duly executed stamped copy of MoA and AoA. 5. Stamped copies of Power of Attorneys in favour of M/s K R A & Co. 6. Proof of payment of RoC registration fee i.e. RoC Challans.

COMPANY LAW

TYPES OF PUBLIC AND PRIVATE COMPANIES


The Companies Act: Incorporated Companies All the companies registered under the Companies Act, 1956, carry out their business activities as incorporated companies. These can be further classified as:

Public companies limited by shares. Public companies limited by guarantee. Public unlimited companies. Private companies limited by shares. Private companies limited by guarantee. Private unlimited companies. Foreign companies. Government companies.

1. Public Company Public Company is a company in which shares are held collectively by the general public rather than a selected few individuals. Minimum number of members in a public company is seven, if members become less than seven; the company is no longer a public company but is rather a private company. 2. Private Company Private company means a company which by its articles of association

Restricts the right of members to transfer its shares Limits the number of its members to fifty. In determining this number of 50, employee-members and ex-employee members are not to be considered. Prohibits an invitation to the public to subscribe to any shares in or the debentures of the company. If a private company contravenes any of the aforesaid provisions, it ceases to be a private company and loses all the exemptions and privileges which a private company is entitled to. Minimum number of members in a private company is two. A private company does not need a separate certificate from the Registrar of Companies for the commencement of its business.

COMPANY LAW

3. Companies deemed to be Public Limited Company A private company will be treated as a deemed public limited company under one of the following circumstances:

Where at least 25% of the paid up share capital of a private company is held by one or more body corporate, the private company shall automatically become a public company on and from the date on which the aforesaid percentage is so held. Where the annual average turnover of the private company during the period of three consecutive financial years is not less than Rs 25 crores, the private company shall be, irrespective of its paid up share capital, deemed a public company. Where not less than 25% of the paid up capital of a public limited company is held by the private company, then the private company shall become a public company on and from the date on which the aforesaid percentage is so held. Where a private company accepts deposits from public, after an invitation is made by advertisement or renews deposits from the public (other than from its members or directors or their relatives), such company shall become public company on and from the date when such acceptance or renewal is first made.

4. Limited and Unlimited Companies Companies may be limited, limited by shares or limited by guarantee. a) Company limited by shares - In this case, the liability of the members is limited to the amount of uncalled share capital. No member of the company limited by the shares can be called upon to pay more than the face value of shares or so much of it as has remained unpaid. The members of limited companies have no liability in case of fully paid up shares. b) Company limited by the guarantee - A company limited by guarantee is a registered company having the liability of its members limited by its Memorandum of Association (MoA) to such amount as the members may respectively thereby undertake to pay if necessary on liquidation of the company. The liability of the members to pay the guaranteed amount arises only when the company has gone into liquidation and not when it is a going concern. c) Unlimited Company: The liability of the members of an unlimited company is
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COMPANY LAW

unlimited. Therefore their liability is similar to that of the liability of the partners in a partnership firm. 5. Holding and Subsidiary companies A company shall be deemed to be subsidiary of another company if: 1. That other company controls the composition of its board of directors; or 2. That other company holds more than half in face value of its equity share capital 3. Where the first mentioned company is subsidiary company of any company which that other's subsidiary. E.g. Company B is subsidiary of the Company A and Company C is subsidiary of Company B, therefore Company C is subsidiary of Company A. The control of the composition of the Board of Directors of the company means that the holding company has the power at its discretion to appoint or remove all or majority of directors of the subsidiary company without consent or concurrence of any other person.

6. Government Companies They refer to any company in which not less than 51% of the paid up share capital is held by the Central Government or any State Government or partly by the Central Government and partly by the one or more State Governments and includes a company which is a subsidiary of a government company. Government Companies is also governed by the provisions of the Companies Act. However, the Central Government may direct that certain provisions of the Companies Act shall not apply or shall apply only with such exceptions, modifications and adaptions as may be specified to such government companies. 7. Foreign Companies It refers to a company incorporated in a country outside India under the law of that other country and has established the place of business in India.
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COMPANY LAW

LEGAL LIMITATIONS AND LIABILITIES


The following are the guidelines and legal rules which the companies are bound to follow for commencement and functioning of their business in the two company format
Private Company Minimum Paid-up Capital Private Company must have a minimum paid-up capital of Rs. 1,00,000 Minimum number of members required to form a private company is 2 Maximum number of members in a Private Company is restricted to 50 There is complete restriction on the transferability of the shares of a Private Company through its Articles of Association A Private Company is prohibited from inviting the public for subscription of its shares, i.e. a Private Company cannot issue Prospectus A Private Company may have 2 directors to manage the affairs of the company There is no need to give the consent by the directors of a Private Company Public Company Public Company must have a minimum paid-up capital of Rs. 5,00,000. Public Company requires at least 7 members. There is no restriction of maximum number of members in a Public Company. There is no restriction on the transferability of the shares of a Public company

Minimum number of members

Maximum number of members

Transerferability of shares

Issue of Prospectus

A Public Company is free to invite public for subscription i.e., a Public Company can issue a Prospectus.

Number of Directors

A Public Company must have at least 3 directors. The Directors of a Public Company must have file with the Registrar consent to act as Director of the company.

Consent of the directors

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COMPANY LAW

Qualification shares

The Directors of a Private Company need not sign an undertaking to acquire the qualification shares

The Directors of a Public Company are required to sign an undertaking to acquire the qualification shares of the public Company. A Private Company cannot start its business until a Certificate to commencement of business is issued to it. A Private Company can issue Share Warrants against its fully paid up shares. Public Company must call its statutory Meeting and file Statutory Report with the Register of Companies.

Commencement of Business

A Private Company can commence its business immediately after its incorporation A Private Company cannot issue Share Warrants against its fully paid shares A Private Company has no obligation to call the Statutory Meeting of the member

Shares Warrants

Statutory meeting

Managerial remuneration

Total managerial These restrictions do not remuneration in the case of a apply on a Private Company. Public Company cannot exceed 11% of the net profits, and in case of inadequate profits a maximum of Rs. 87,500 can be paid.

TRANSITION
Conversion of Public Company into Private Company
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Key requirements/conditions: The company shall not be listed on any recognized stock exchange. In case of a listed company, it will have to wait for at least one year after its delisting DIN (Director Identification Number) for all the Directors DSC (Digital Signature Certificate) for one of the Directors Steps in Conversion of a Public Limited Company into a Private Limited Company:
Step No. Steps Timeframe (Working days) Processing

Board Meeting

For consideration of the proposal of conversion of the Public company into a Private company. Give 21 days' clear notice for the General Meeting proposing the Special Resolutions with suitable Explanatory Statement. File Form No. 23 within 30 days of passing of the resolution Attachments: Special Resolution and the Explanatory Statement Memorandum and Articles (before and after alteration)

Notice of General meeting

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Filing of Special Resolution with RoC

Publish Newspaper Notice for conversion of the Company

In two widely circulated dailies of the State where the Regd. Office of the company is situated. In two widely circulated dailies of the 14

COMPANY LAW

State where the Regd. Office of the company is situated. 5 Application to the Central Government 25 File Form 1B with the RoC Attachments: Notice of extra-ordinary general meeting Minutes of extra-ordinary general meeting Copy of special resolution Copy of newspaper advertisement. Affidavit that the company is not listed on any stock exchange. Reference number, date of passing and date of filing the e-Form 23. Payment of requisite application fee. One copy each of the annual reports for the last three financial years. Copy of the last annual return. Altered Memorandum and Articles of Association. No objection letters from major unsecured and all secured creditors supported by an Affidavit. Reasons for conversion. Terms of appointment of all managerial personnel. Power of attorney in favour of the authorised representative.

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On receipt of application, the Registrar of Companies (ROC) shall examine: Whether the interest of the public and particularly that of the creditors will be adversely affected? Whether the company is listed? Capital contribution by members. Whether e-Form 23 has been passed and taken on record? Whether the reasons for conversion are just and sufficient? How many members voted for the resolution? Whether any complaint against the company is pending? Whether any show cause letter has been issued to the company or its Directors? If there is any objection from members and creditors. If the ROC approves the application, he refers it to Technical Section and Prosecution Section for their report. The Technical Section reports on whether the relevant e-Form23 and the last years annual report and annual return has been filed and passed/taken on record. The Prosecution Section reports on whether any complaint is pending from anybody against the company. If during the scrutiny any adverse point arises, that has to be looked into and the authorised representative should take the initiative to make good the default or defect. Issue of fresh Certificate of Incorporation If the reports are satisfactory, the ROC will issue a letter granting its approval for conversion of a public company into a private company. The concerned ROC then issues fresh certificate of incorporation consequent upon change of name after conversion of the company from 'Public Company' to 'Private Company'.

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COMPANY LAW

Conversion of Private Company into Public Company


Key Benefits: Easy access to Public for raising funds Public limited Company is the only corporate form of organization which is allowed to raise funds from general public. Public Limited Company enjoys better avenues for borrowing of funds. It can issue debentures, secured as well as unsecured, accept deposits from the public, etc. Banking and financial institutions prefer to render large financial assistance to Public Limited Companies. Even a closely held Company can operate as a Public Company without diluting promoters stake. High market recognition Public Limited Companies as compared to other business forms enjoys better recognition in the market and bestows confidence in the stakeholders.

Key Requirements: Minimum Authorised Share Capital shall be Rs. 500,000 (INR Five Lac) Minimum Paid-up Share Capital shall be Rs. 500,000 (INR Five Lac) Minimum 7 Shareholders Minimum 3 Directors The directors and shareholders can be same person If the above requirements are not fulfilled by the Private Company, then the relevant alterations / changes to be made before conversion DIN (Director Identification Number) for all the Directors DSC (Digital Signature Certificate) for one of the Directors Steps in Conversion of a Private Limited Company into a Public Limited Company 17

COMPANY LAW

Step No. 1

Steps

Board Meeting

Timeframe Processing (Working days) 2 Pass a resolution for deletion of articles (which are originally required to be included in the articles of a private company) and recommend it to the shareholders for adoption by them at a General Meeting 21 Give 21 days' clear notice for the General Meeting proposing the Special Resolutions with suitable Explanatory Statement. File Form No. 23 within 30 days of passing of the resolution Attachments: Special Resolution and the Explanatory Statement

Notice of General meeting

Filing of Special Resolution with RoC

Filing of Prospectus or Statement in lieu of prospectus

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File Form 62 with the RoC Attachments: Prospectus or Statement in lieu of prospectus (SLP) Letter of Application to the Registrar for fresh Certificate of Incorporation Consent letter of the Auditor for inclusion of his name in the SLP

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WHO HAS AN EDGE OVER WHOM?


Public Limited company Advantages of Public Limited Companies There is limited liability for the shareholders. The business has separate legal entity. There is continuity even if any of the shareholders die. These businesses can raise large capital sum as there is no limit to the number of shareholders. The shares of the business are freely transferable providing more liquidity to its shareholders. Disadvantages of Public Limited Companies There is lot of legal formalities required for forming a public limited company. It is costly and time consuming. In order to protect the interest of the ordinary investor there are strict controls and regulations to comply. These companies have to publish their accounts. The original owners may lose control. Public Limited companies are huge in size and may face management problems such as slow decision making and industrial relations problems. Private Limited Companies Advantages of Private Limited Companies Limited Liability: It means that if the company experience financial distress because of normal business activity, the personal assets of shareholders will not be at risk of being seized by creditors. Continuity of existence: business not affected by the status of the owner. Minimum number of shareholders need to start the business are only2.
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More capital can be raised as the maximum number of shareholders allowed is 50. Scope of expansion is higher because easy to raise capital from financial institutions and the advantage of limited liability. As the companys ownership is private, it is not required need to meet the strict Securities and Exchange Commission filing requirements of public companies.

Disadvantages Growth may be limited because maximum shareholders allowed are only 50. The shares in a private limited company cannot be sold or transferred to anyone else without the agreement of other shareholders Public Limited Company vs. Private Limited Company The distinction between a public company and a private company are explained in the following manner: 1. Minimum number of members The minimum number of person required to form a public company is seven, whereas in a private company their number is only two. 2. Maximum number of members There is no limit on the maximum number of member of a public company, but a private company cannot have more than fifty members excluding past and present employees. 3. Commencement of Business A private company can commence its business as soon as it is incorporated. But a public company shall not commence its business immediately unless it has been granted the certificate of commencement of business. 4. Invitation to public A public company by issuing a prospectus may invite public to subscribe to its shares whereas a private company cannot extend such invitation to the public.
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5. Transferability of shares There is no restriction on the transfer of share In the case of public company whereas a private company by its articles must restrict the right of members to transfer the share. 6. Number of Directors A public company must have at least three directors whereas a private company may have two directors. 7. Statutory Meeting A public company must hold a statutory meeting and file with the register a statutory report. But in a private company there are no such obligations. 8. Restrictions on the appointment of Directors A director of a public company shall file with the register consent to act as such. He shall sign the memorandum and enter into a contact for qualification shares. He cannot vote or take part in the discussion on a contract in which he is interested. Two-thirds of the directors of a public company must retire by rotation. These restrictions do not apply to a private company. 9. Managerial Remuneration Total managerial remuneration in the case of public company cannot exceed 11% of net profits, but in the case of inadequacy of profit a minimum of Rs. 50, 000 can be paid. These restrictions do not apply to a private company. 10. Further Issue of Capital A public company proposing further issue of shares must offer them to the existing members. A private company is free to allot new issue to outsiders. 11. Name A private company has to use words private limited at the end of its name. But a public company has to use only the word Limited at the end of its name.

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PRACTICAL COMPARISON
Practical comparison between Maruti Suzuki India Ltd and Meghna Automotive private limited:

Meghna Automotive private limited is owned by Mr. Harish Shankla and Mrs. Jayanthi Shankla. Maruti Suzuki India Ltd. is owned by its shareholders and Suzuki Motors. Board of Directors of Meghna automotive private ltd. are the owners themselves i.e. Mr. Harish Shankla and Mrs. Jayanthi Shankla. Board of Directors of Maruti Suzuki Ltd-R C Bhargava, Shinzo Nakanishi, Manvinder Singh Banga, Amal Ganguli, D S Brar, Keiichi Asai, Osamu Suzuki, Kinji Saito, Pallavi Shroff, Kenichi Ayukawa, Tsuneo Ohashi, Kazuhiko Ayabe. For a private enterprise, it is thus easier to make decisions as the decision makers are fewer in number while a pubic company needs a lot more time and angles as its is answerable to its shareholders and stakeholders.

Two third of the directors of Maruti Suzuki India Ltd. Must retire by rotation. Meghna automotive private limited may not do the same and can enjoy lifetime role as a Board of Director. Maruti Suzuki India Ltd must hold a statutory meeting and file with the register a statutory report but Meghna automotive Pvt. Ltd have no such obligations, unless called upon by the members. There is no restriction in the transfer of share in case of Maruti Suzuki India Ltd whereas Meghna Automotive Pvt. Ltd by its articles must restrict the right of members to transfer the shares. Maruti Suzuki India can invite public to subscribe its shares by issuing a prospectus. On the contrary Meghna Automotive Pvt. Ltd cannot extend such invitation to the public.

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Maruti Suzuki India Ltd was founded in the year 1981 whereas Meghna Automotive Pvt. Ltd was founded in the year 2004.

CONCLUSION
Gone are the days when sole proprietorship and partnership were the most preferable form of the business wherein the persons use to invest and earn profits out of the business for themselves. Though these form of businesses still exist but are not the most common form of business today as now the taste of the consumers has changed, technology has advanced manifold, etc., which require funds, huge funds and because of involvement of few persons in sole proprietorship or partnership this need of huge investment, production at large scale, etc, was not possible. So to fulfil these needs company form of business came into existence, as also with the time demand shifted from traditional goods to the capital goods and technological products, which require huge amount of labour and capital, supply of which was not the possible for a handful of persons. There have been considerable changes in company law in the last few years. And the changes have put more responsibility on the shoulders of Directors. Public limited companies and private limited companies have their own unique features exhibiting advantages and disadvantages. The Company law specifies how different business can be set up, how taxes apply to them, registrations, documentations and requirements; define different terms pertaining to business, making by-laws, and articles of organization among many others. It is essential that directors are aware of existing, new proposed legislation and take the best advice on how to meet its requirements. Directors must have access to the best advice on how to meet its requirements. This is important commercially as well as legally. For example directors should ensure Articles of Association reflect not only the law but also the companys needs and best practice. Directors must also have the necessary technical assistance to cope with internal reorganizations, buyouts, mergers and acquisitions. The role is not only to give constructive guidelines on matters of company law but also to ensure that routine but vitally important details are not overlooked. In addition the late filing of Accounts, Annual Return & other documents at Registers of Companies can lead to the imposition of substantial late filing penalties upon a company and the possibility of criminal action against the directors. The Company law ensures all such provisions
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and legislations are maintained. Depending on the requirements of the business and the objectives, it may choose to maintain a pubic or a private form. In this paper our attempt to study pubic and private i.e. Maruti Suzuki and Meghna Automotives allows us to determine the legal stature of both the entities and understand the extent of liabilities and advantages attached with both the Companies.

BIBLIOGRAPHY & ANNEXURE


1. WEB SOURECES

http://en.wikipedia.org/wiki/Company_Law_Board http://www.jkgupta.com/company-law/ http://www.legalserviceindia.com/articles/eocindia.htm http://www.vakilno1.com/bareacts/companiesact/companiesacts.htm

2. BOOKS AND JOURNALS India Companies Act 1956

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