IGNOU| COMPANY LAW (BCOE - 108/ ECO - 08)| SOLVED PAPER – (DEC - 2022)| (BDP)| ENGLISH MEDIUM
BACHELOR'S DEGREE PROGRAMME
Term-End Examination
December - 2022
BCOE-108/ECO-08
COMPANY LAW
Time: 2 hours
Maximum Marks: 50
(Weightage: 70%)
Note: Answer any five questions. All questions carry
equal marks.
1. Define a Company. Explain the main features of a company. 2+8
Ans:- Company is a legal entity formed by a group of
individuals to conduct business enterprise in a commercial or industrial
capacity. The scope of business of a company depends on its structure, which
can range from partnership to proprietorship or corporation.
There is a
company:-
(i) A legal
entity representing an association of people with a specific purpose, whether
natural, legal or a mixture of both
(ii) A
voluntary association of persons recognized by law, having a distinct name and
common seal
(iii) Formed
to carry on business for profit with capital divided into transferable shares.
(iv) Limited
liability
(v) a body
corporate
(vi)
Continuous succession
(vii) An
artificial person created by law, which has a separate legal entity
(viii) A
common seal
A company is
formed for the business purpose of producing goods or services for the market,
which can be a source of profit or other financial gain for its owners.
A company has
its own advantages and disadvantages compared to other business structures. It
is important to seek legal advice beforehand about what structure will be best
suited for your business.
The main
characteristics of a company are as follows:-
(i) Separate
legal entity: A company is a legal entity separate from its members. This
means that the company has its own rights and liabilities, and its members are
not personally liable for the company's debts.
(ii)
Perpetual Succession: A company continues to exist even if its members
change or die. This means that a company can have a long life, even if its
individual members come and go.
(iii) Limited
Liability: Members of a company are usually liable only for the amount they
have invested in the company. This means that they are not personally liable
for the company's debts.
(iv)
Transferability of shares: Shares of a company are usually transferable,
that is, they can be bought and sold. This allows investors to invest in
companies without being involved in the daily management of the company.
(v) Common
Seal: A company has a common seal, which is used to authenticate documents.
The use of the common seal helps ensure that the documents are genuine and
signed by authorized representatives of the company.
(vi)
Perpetual Succession: The company being an artificial person established by
law continues to exist irrespective of differences in its membership. In simple
words, a company is an artificial person. Therefore there is no age restriction
in this. Factors such as death, bankruptcy, retirement or insanity of one or
all the members do not affect the status of the company.
(vii) Number
of members: As per the Companies Act, 2013, the minimum number of members
required to start a public limited company is seven, while for a private
limited company it is two. The maximum number of members for a public limited
company can be unlimited whereas for a private limited company it is limited to
200.
These are some
of the main characteristics of a company. There are many other characteristics
that may apply to different types of companies depending on their jurisdiction
and the laws governing them.
2. Point out the differences between Memorandum and
Articles of Association. Are they necessary for every company? 8+2
Ans:- The differences between Memorandum and Articles of
Association are:-
|
MEMORANDUM OF ASSOCIATION |
ARTICLES OF ASSOCIATION |
|
|
Meaning |
Memorandum of Association is a document
that contains all the basic information required for the incorporation of a
company. |
The Articles of Association is a document
that contains all the rules and regulations governing the company. |
|
Type of
information contained |
Powers and objects of the company. |
Company rules. |
|
Situation. |
This is under the Companies Act. |
This is subject to memorandum. |
|
Retroactive
effect |
The Memorandum of Association of a company
cannot be amended retrospectively. |
The articles of association may be amended
retroactively. |
|
Main content |
A memorandum should have six sections. |
Articles can be tailored according to
company preferences. |
|
Mandatory |
Yes, for all companies. |
Only a private company is required to
prepare its articles whereas a public company limited by shares can adopt
Table F in place of the articles. |
|
Mandatory to
be filed at the time of registration |
Necessary |
Not necessary at all. |
|
Change |
Changes can be made after passing a
special resolution (SR) in the Annual General Meeting (AGM) and prior
approval of the Central Government (CG) or Company Law Board (CLB) is
required. |
Changes to the articles can be made by
passing a special resolution (SR) at the annual general meeting (AGM). |
|
Relationship |
Defines the relationship between the
company and the outsider. |
Regulates relations between the company
and its members and between the members. |
|
Working out
of bounds |
Absolutely zero |
Ratification can be done by the
shareholders. |
Boundary rules
specify the area outside which the company cannot operate. Bylaws are the rules
within that area. Therefore, only limited rules determine the parameters of
rules and regulations. The statute of limitations can be changed only under
certain conditions and according to the procedure provided in the Act.
3. What is an Illegal Association? What are its
consequences? 5+5
[COMING SOON]
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