Legal Environment of Business

To win over proxy wars (in the case of takeover bids), where the corporate board or equity holders meetings are exposed to proxy wars, the directors have to adopt strategies based on the steps given below: Collection of material information Construction of proxy fight team Mass contact with shareholders Board of Directors of a company while facing a takeover bid have to work hard to defeat such a bid. Therefore they should collect all possible information about the affairs of their own company, competitors, the takeover — bidder and the opponents. Particularly the management of a company with small holdings on their board face stiff problem. In that case the only remedy is to allow board members to increase shareholdings. To face the opponents, the board must use all the material information available for their defense. The proxy fight team includes experts and persons of experience to help the management Continue reading

A contract may be unconditional or absolute on the one hand and conditional or contingent on the other. The absolute or unconditional contract is one without any reservations or conditions and is to be performed under any event. On the other hand, conditional or contingent contract is one in which a promise is conditional and the contract shall be performed only on the happening or not happening of some future uncertain event. The event must be collateral to the contract. The condition may be precedent or subsequent. For example, goods are sent on approval, the contract is a contingent contract depending on  the act of the buyer to accept or reject the goods. According to the section 31 of the contract Act 1872, “A Contingent contract is a contract to do or not to do something, if some event, collateral to such contract, does or does not happen.” A Contingent Continue reading

Statutory Meeting  is the first meeting of the shareholders of a public company. It must be held within a period  of not less than one month nor more than 6 months from the date at which the company is entitled to  commence business. It is held only once in the lifetime of a company. A private company and a  company limited by guarantee and not having a share capital need not hold such a meeting. The purpose of the statutory meeting with its statutory report is to put the shareholders of the company in  possession of all the important facts relating to the new company, what shares have been taken up, what  moneys received etc. This also provides an opportunity to the shareholders of meeting to discuss the  whole situation, the management and prospects of the company. The Board of Directors must, atleast 21 days before the day on which Continue reading

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

‘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

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