The rules and regulations which are framed for the internal management of a company are set out in a document known as the Articles of Association. The articles are framed to enable the company to carry out the aims and objects of the company set out in the Memorandum of Association. Contents of Articles of Association The regulations and bylaws laid down in the Articles relate to the following: Share capital and its subdivision into different classes of shares, rights of shareholders and their variation; The procedure for making allotment, calls on shares and transfer, transmission, forfeiture and surrender of shares, including lien on shares; Alteration and reduction of capital; Borrowing powers; Appointment of Manager, Managing Director, Secretary; Declaration of dividend; Procedure for convening, holding and conducting different kinds of meetings, voting rights and methods; Maintenance of books of account and their audit; Share Certificates and Share Warrants, conversion Continue reading
Business Law
The Depositories Act, 1996
The Depositories Act, 1996 was enacted to provide for regulation of depositories in securities and for matters connected therewith or incidental thereto. It came into force from 20th September, 1995. The terms used in The Depositories Act,1996 are defined as under: (1) “Beneficial owner” means a person whose name is recorded as such with a depository. (2) “Depository” means a company, formed and registered under the Companies Act, 1956 and which has been granted a certificate of registration under sub-section (1A) of section 12 of the SEBI Act, 1992. (3) “Issuer” means any person making an issue of securities. (4) “Participant” means a person registered as such under sub-section (1A) of section 12 of the SEBI Act, 1992. (5) “Registered owner” means a depository whose name is entered as such in the register of the issuer. Agreement between depository and participant A depository shall enter into an agreement in the Continue reading
Fundamental Principles of Insurance Contract
The Contract of Insurance is a contract whereby a person undertakes to indemnify another against a loss arising on the happening of an event or to pay a sum of money on the happening of an event. The person who insures is called “Insurer”. The person who effects the insurance is called the “Insured” or “Assured”. The price for the risk undertaken by the insurer and paid by the insured to the insurer is called “Premium” and the document which contains the contract of insurance is called “Policy”. Following are the general principles of contract of insurance: Uberrimae Fidei: A contract of insurance is a contract uberrimae fidei, i.e. a contract requiring utmost good faith of the parties. So, all material facts which are likely to influence the insurer in deciding the amount of premium payable by the insured must be disclosed by the insured. Failure to disclose material facts Continue reading
Offer and Acceptance
One of the early steps in the formation of contract lies in arriving at an agreement between the contracting parties by means of offer and acceptance. One party makes a definite proposal to the other, and that other accepts it in its entirety. Offer An offer is also called a proposal. Sec.2 (a) of the Indian Contract Act defines a proposal as, “When one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence, he is said to make a proposal”. The person making the proposal is called the “proposer”, or “offeror” and the person to whom the proposal is made is called the “offeree”. Essentials of Valid Offer It must contain definite, unambiguous and certain and not loose and vague terms. It must intend to give rise to legal relationship. Continue reading
Crossing of Cheques
Crossing means drawing two parallel transverse lines across the face of the cheque with or without the words “and company” in between the lines. It is a direction to the drawee bank not to pay the amount at the counter, but only through a bank. It is made to guard payment against forgery by unscrupulous persons. Crossing of cheques is of two kinds: (1) General Crossing and (2) Special Crossing. 1. General Crossing Sec. 123 of the Negotiable Instruments Act defines General Crossing as, “where a cheque bears across its face an addition of the words ‘And Company’ or any abbreviation thereof, between two parallel transverse lines or of two parallel transverse lines simply, either with or without the words ‘not negotiable’, that addition shall be deemed to be a crossing and the cheque shall be deemed to be crossed generally”. Two parallel transverse lines across the face of the Continue reading
Difference between Sale and Agreement to Sell
Section 4(1) of the sale of Goods Act defines a contract of sale of goods as — “a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price”. The definition of contract of sale of goods reveals that either actual sale or an agreement to sell both are covered under the act. But, there are certain differences between the two. Where in a contract of sale, the property in the goods is immediately transferred from the buyer to the seller it is called a sale. Where under a contract of sale, the transfer of property in the goods is to take place in the future or after the fulfillment of certain conditions, it is called ‘An agreement to sell”. A sale and an agreement to sell can be distinguished as:- i) Transfer of Property (Ownership): In a sale, the property in Continue reading