Company Law Notes for LLB Students

Company Law in Indian LL.B. courses is taught under the Companies Act, 2013. These notes cover the foundational concepts most commonly examined.

Separate Legal Entity and Lifting the Corporate Veil

A company is a separate legal person distinct from its shareholders, as established in Salomon v. Salomon & Co. Ltd. (1897), followed in Indian company law. Courts “lift the corporate veil” in limited circumstances — fraud, improper conduct, tax evasion, or where a company is a mere sham/facade — to hold the persons behind it liable, as recognised under Sections 7(7), 251 and 339 of the Companies Act, 2013.

Types of Companies

Private company (Section 2(68), minimum 2 members, maximum 200, restricts share transfer), public company (Section 2(71), minimum 7 members, no maximum), one-person company (Section 2(62), introduced by the 2013 Act), and Section 8 companies (not-for-profit) are the key classifications.

Incorporation

Incorporation requires a Memorandum of Association (MOA, the company’s charter, defining its objects under Section 4) and Articles of Association (AOA, internal rules under Section 5), filed with the Registrar of Companies along with other prescribed documents under Section 7. A Certificate of Incorporation is conclusive evidence of compliance (Section 7(7)).

Directors and Corporate Governance

Sections 149-172 govern directors: minimum number (2 for private, 3 for public companies), at least one resident director, independent directors for listed/specified public companies, duties of directors (Section 166 — act in good faith, exercise reasonable care), and prohibition on undischarged insolvents or persons convicted of certain offences from being directors (Section 164).

Winding Up

Winding up (now largely routed through the Insolvency and Bankruptcy Code, 2016 for insolvency-based winding up) can be by the Tribunal (NCLT) under Section 271 of the Companies Act, 2013 on grounds including inability to pay debts, conduct of affairs in a fraudulent manner, or just and equitable grounds.

Key exam questions to prepare

• Doctrine of separate legal entity and when courts lift the corporate veil.
• Distinguish MOA from AOA.
• Duties of directors under Section 166, Companies Act, 2013.

More: all LL.B. subject notes