A ‘Meeting’ may be defined as any gathering, assembly or coming together of two or more persons for the transaction of some lawful business of common concern. Like any other association, a company must also hold meetings for its proper functioning. The shareholders or members of a company, who are the real owners, must have the opportunity to collectively discuss the affairs of the company and to exercise their ultimate control over the management of the company. Similarly, the directors, in whom the management of the company is vested, must come together periodically to function as a team and take collective decisions regarding the business policy of the company and to exercise overall supervision over the management. Thus, the management of a company is really carried on through meetings of shareholders and directors and the resolutions adopted therein. Requisites of a Valid Meeting If the business transacted at a meeting Continue reading
Mercantile Law
Re-Insurance and Double Insurance
Re-insurance and double insurance contracts are two different concepts and are detailed here under. They both are similar to the contract of insurance, however, they have their own nature and the contract goes on as per the requirement. Re-insurance Every insurer has a limit to the risk that he can undertake. If at any time a profitable venture comes his way, he may insure it even if the risk involved is beyond his capacity. Then in order to safeguard his own interest, he may insure the same risk either wholly or partially with other insurers. This is called re-insurance. The reason for re-insurance like the reason for original insurance is the necessity of spreading the risk. Re-insurance can be resorted to in all kinds of insurance. The insurer has an insurable interest in the subject-matter insured to the extent of the amount insured by him because a contract of re-insurance Continue reading
Preparation of Minutes under Companies Act
‘Minutes’ have been defined as the written record of the business done at a meeting. The minutes comprise the official record of the proceedings and decisions of a meeting. They constitute a clear, concise, accurate and permanent record of the decisions and actions of a constituted body. Once approved and signed by the chairman, they are acceptable as evidence of the proceedings in a court of law. Provisions of the Companies Act regarding Minutes Section 193 of the Companies Act makes it obligatory for every company to maintain minutes of the proceedings of every general meeting and meetings of the Board of Directors and its Committee. It has also been laid down that minutes of company meetings kept in accordance with the provisions of this section will be recognized as evidence of the proceedings recorded therein. Entries must be made in the minutes book within thirty days of the conclusion Continue reading
Liabilities for Mis-Statements in Prospectus
Sec. 2(36) of the Companies Act defines a prospectus as, “any document described or issued as a prospectus and includes a notice, circular, advertisement or other document inviting deposits from the public or inviting offers from the public for the subscription or purchase of any shares in or debentures of a body corporate”. Thus any document inviting the public to buy its shares or debentures comes under the definition of prospectus. It also applies to advertisements inviting deposits from the public. Under Sec.65 of the Companies Act, a prospectus will be deemed to contain an untrue statement, if: The statement included in the prospectus is misleading in the form or in the context in which it is included; and There is an omission from the prospectus of any matter which is calculated to misled [Sec.65(1)]. Civil Liability for Mis-Statement Civil liability arises when there is a mis-statement or misrepresentation of Continue reading
Mutual Rights and Liabilities of Partners in a Partnership Firm
Section 4 of Indian Partnership Act, 1932 defines Partnership as, “Partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all”. The rights, duties and liabilities of partners make the mutual relationship between the partners more clear. Partners can themselves determined their rights by contract, but the partnership act confers certain rights upon the partners. The rights and liabilities of partners can be illustrated as:- Rights of Partners i) Right to take part in the Conduct or Management of Business: Every partner, irrespective of the amount contributed by him, has an inherent right to participate in the conduct of business of the firm. However, by mutual agreement, some partners may be restricted to take part but, the right to participate in the management must be available to all ii) Right to be Consulted Continue reading
Legal Definition and Charactristics of Negotiable Instruments
Negotiable Instruments Act The law relating to “Negotiable Instruments” is contained in the Negotiable Instruments Act, 1881, as amended up-to-date. It deals with three kinds of negotiable instruments, i.e., Promissory Notes, Bills of Exchange and Cherubs. The provisions of the Act also apply to ‘hands’ (an instrument in oriental language), unless there is a local usage to the contrary. Other documents like treasury bills, dividend warrants, share warrants, bearer debentures, port trust or improvement trust debentures, railway bonds payable to bearer etc., are also recognized as negotiable instruments either by mercantile custom or under other enactments like the Companies Act, and therefore, Negotiable Instruments Act is applicable to them. Definition & Features The word ‘negotiable’ means ‘transferable by delivery’, and the word ‘instrument’ means ‘a written document by which a right is created in favor of some person’. Thus, the term ‘negotiable instrument’ literally means ‘a written document transferable by Continue reading