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
Business Law
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
Micro, Small and Medium Enterprises Development Act, 2006
An Act to provide for facilitating the promotion and development and enhancing the competitiveness of micro, small and medium enterprises and for matters connected therewith or incidental thereto. Whereas a declaration as to expediency of control of certain industries by the Union was made under section 2 of the Industries (Development and Regulation) Act, 1951; And whereas it is expedient to provide for facilitating the promotion and development and enhancing the competitiveness of micro, small and medium enterprises and for matters connected therewith or incidental thereto; Be it enacted by Parliament in the Fifty-seventh Year of the Republic of India as follows: 1. Short title and commencement. (1) This Act may be called the Micro, Small and Medium Enterprises Development Act, 2006. (2) It shall come into force on such date as the Central Government may, by notification, appoint; and different dates may be appointed for different provisions of this Continue reading
Rights, Duties and Disqualifications of Directors of a Company
Section 2(13) defines a Director as, “any person occupying the position of director by whatever name called”. Thus, a person will be deemed to be a director if he performs the functions of a director, though he may be named differently. A director is that person who has full control over the direct management and conduct of the company. The directors of a company are collectively referred as the “Board of Directors”, or “Board”. Only individuals can be directors. No body corporate, association or a firm can be appointed director of a company. Rights of Directors i) Right to Participate in the Affairs of the Company: A director, validly appointed, has a right to attend the meetings and participate in the affairs of the company regarding direction, supervision and control, etc. ii) Right to have Remuneration: Every director has a right to remuneration fixed either under any contract or Continue reading
Doctrine of Constructive Notice and Indoor Management
Doctrine of Constructive Notice The Memorandum and Articles, on registration, assume the character of public documents. The office of the Registrar is a public office and documents registered there are open and accessible to the public at large. Therefore, every outsider dealing with the company is deemed to have notice of the contents of the Memorandum and Articles. This is known as Constructive Notice of Memorandum and Articles. Under the doctrine of ‘constructive notice’, every person dealing or proposing to enter into a contract with the company is deemed to have constructive notice of the contents of its Memorandum and Articles. Whether he actually reads them or not, it is presumed that he has read these documents and has ascertained the exact powers of the company to enter into contract, the extent to which these powers have been delegated to the directors and the limitations to such powers. He is Continue reading