A company is a "corporation" - an artificial person created by law. 1. Characteristics Of A Company. Its impact on the company and shareholders. On incorporation under law, a company becomes a separate legal entity as compared to its members. Bond issuers and bondholders enter into a legally enforceable contract known as an indenture. Static Rate of Interest View Notes - CLaw - Lecture 9 Debentures & Charges Student Edition from CLAW - at Ngee Ann Polytechnic. debentures increases the financial risk of the company. ... debentures first in priority to unsecured creditors. Contributed surplus consists of accumulated stock … Incorporated association. They are normally repayable at the end of a fixed period. The first section of this course will cover the nature, characteristics, definition, history and a brief overview of company law with emphasis on the provisions of the Companies Act, 2019 (Act, 992). The attached eBook of Law of Companies contains self-prepared notes that will help you understand the concepts & theories and help you score well in your examinations. Even at common law, negotiable instruments, deeds of covenant, and promises to purchase property at a future date are not considered debentures: Handevel Pty Ltd. v Comptroller of Stamps (Vic) (1985) 157 C.L.R. It is an instrument in writing. is known as company. Download Company Law Notes, PDF, Books, Syllabus for MBA, BBA, BCOM 2021.We provide complete company law notes. They may have a floating charge on the whole of the assets of the company. The debentures provide for a fixed rate of interest to the debenture holders. As of today, the Companies Act, … The above amounts include shares issuable if the holders of the 6.5% Convertible Subordinated Debentures exercise their conversion option but exclude Class A Subordinate Voting Shares issuable, only at the Company's option, to settle interest and principal related to the 6.5% Convertible Subordinated Debentures.. Business Environment and Law-Debentures Classes Of Debentures. Funds are raised by such debentures to purchase certain equipment for the running life of the business. Saloman was entitled to 6,000 as the company was an entirely separate person from Saloman. A public company as per Section 2(71)- This certificate is issued under the company seal and is known as a Debenture Deed. They have priority of claim over that of shareholders. The Companies Act, 1956 (“Companies Act”) defines ‘debenture’ as follows: “debenture” includes debenture stock, bonds and any other securities of a company, whether constituting a charge on the assets of the company or not; COMPANY LAW CONTENTS LESSON 1 INTRODUCTION Page Learning Objectives/Lesson Outline … 1 Meaning and Definition of a Company ... 2 Nature and Characteristics of a Company ... 2 Company vis-a vis other Forms of Business … 10 Development of Company Law in India ... 12 Concept Paper on Company Law, 2004 and Dr. J J Irani Committee Report … 15 A company is a "legal" person. Debentures are primarily advantageous because of their definite maturity period. Chapter 2 Meetings - Own Notes. A private company owns and trades the private stock of the company but does not provide its shares to the general public. The key difference between Shares vs Debentures is that Shares are the capital that is owned by the shareholders in the company. These are quite critical for the exam. The objective of the course is to understand and evaluate the legal framework of Corporate Environment in India and to gain elementary knowledge of Indian Corporate Law. Hi Fellow law students, here I am sharing lecture notes in eBook format (PDF) for the subject - Company Law for LLB and BA.LLB law students. Ltd., 53/15, Old Rajinder Nagar, Post Box No. It is issued under the seal of the company. • Powers to be exercised at Board meeting: The Board of directors of the company shall exercise the following powers on behalf of the company by means of resolutions passed at the meetings of the Board, viz., the power toa) Make calls on shareholder in respect of money unpaid on their shares: b) Issue debentures: c) Borrow money otherwise than on debentures … Debentures • Securing of Debts:Charges ; Creation, Modification and Satisfaction of Charges ... 4. Company law MCQs . Characteristics of company The characteristics of a company are: 1) Incorporated association: A company must be incorporated or registered under the Companies Act. Membership: To form a private company, minimum two members are required, whereas a public company can be formed if there are at least seven members. Memorandum of Association 4. As Lord Macnaughten puts it, “the company is at law a different person altogether from the subscribers. They are basically documents that evidence the existence of a debt in a company's name. 2 (12)].Thus, the Act only states that it is a kind of security which constitutes a charge by way of security on issuing debentures. Articles of Association 5. A voluntary association of people with common business objectives such as common capital, sharing of profit or loss, common seal etc. An oral promise in acknowledgement of a debt is not a debenture. Debentures – if 'tangible property' (real estate, land, equipment, for example) is offered as security. The issue of debentures is a particular mode of borrowing money by companies. Debentures addresses the relevant legal principles of debentures, how the Companies Act 2006 defines and provides for debentures and whether debentures can create a security interest. 4. Debentures are instruments of debt, which means that debenture holders become creditors of the company. If a company gains no profit, no interest ill be payable. Details and description of partnership law in Ghana will … Write any three features of the company. Membership, Depositories and Transfer/Transmission ... Company—Its Nature and Characteristics ... 2 . Debentures in certificated form are issued in denominations of $50, $100, $500, $1,000 and $10,000 with the name of the owner inscribed … Shares and Types/Kinds of Shares in Company Law in India Reference • Chapter IV (Sections 43 to 72) of the Companies Act, 2013 on Share Capital and Debentures 2. . 2844, New Delhi-110060. INTRODUCTION Company Law is governed by the Companies act, 1956, which was later replaced by Companies Act, 2013. Generally, debentures are secured. Their equity characteristics include: Gaining or losing value with the underlying stock. An Artificial Person Created by Law: A company is a creation of law, and is, sometimes called an artificial person. Only after paying dividend on preference shares, the company shall pay dividend to equity shareholders. (c) Redemption of debenture involves a larger amount of cash outflow. According to Section.2 (12), ‘debenture’ includes debenture stocks bonds and any other securities of a company, whether constituting a charge on the assets of the company or not .section 2(12) does not explain as to what a debenture really is. Shares are considered as a type of security. Debentures provide funds for the company or individual, and the loans are not restricted in terms of how much they can borrow – unlike regular loan options. Corporate Personality 2. Debentures • Securing of Debts:Charges ; Creation, Modification and Satisfaction of Charges ... Company Law Journal : Company Law Journal (India) Pvt. Debentures, like other forms of bonds, are formalised in an indenture. Definition of company, characteristics of company, lifting the The invitation should be made by the company or on behalf company. Shares are considered as a type of security. Commencement of Business, Meeting and Proceedings, 11. 2. This enables the company to know the owner of such debentures, so that it can pass on to them, the benefits of holding the debentures. A Company is a "legal person" or "legal entity" separate from and capable of surviving beyond the lives of, its members. Nature and Characteristics of a Company ... 2 Company vis-a vis other Forms of Business … 10 Posted On : 14.05.2018 09:24 pm . Value loss will only extend to the established bond-floor of the debenture’s bond-like attributes. #1. They are also known as a bond which serves as an IOU between issuers and the purchaser. Unlike other fiscal instruments, a debenture has a fixed time period and thus assures the investor that the money will be repaid. exchange for loan facility to the bor rower. These Company Law MCQS are useful for B.Com, BBA, M.Com, MBA, UGC – NET (NTA NET), CA – IPCC, CMA Intermediate, CS Foundation … Although debentures provide long-term funds to a company, they mature after a specific period. COMPANY LAW MODULE I I - PAPER 4 . Multiple Choice Questions and Answers (MCQS) Companies Act 2013 MCQs (2021 – 2022) Given below are Company Law MCQs Multiple choice questions and answers updated for 2021 – 2022 exams. 2. 3. Incorporated Association: Company is an incorporated association of persons created by the … The following are the major differences between Shares and Debentures: The holder of shares is known as a shareholder while the holder of debentures is known as debenture holder. The security offered by the company determines the name of the investment. Most bonds have no specific security attached to them and really should be called “unsecured debentures.”. It is an acknowledgement of the indebtedness of the company to its holder for the amount stated in it. Convertible Debenture Characteristics. CHARACTERISTICS OR FEATURES OF A COMPANY. The following are the defining characteristics of a company: – 1. Debentures carry different types of risk, including interest rate risk and inflationary risk. Answer (1 of 2): * Credit Instrument: A debenture-holder is a creditor of the company and is entitled to receive payments of interest and the principal and enjoys some other rights. A company has to fulfil requirements in terms of documents (MOA, AOA), shareholders, directors, and share capital to be deemed as a legal association. Doctrine of Constructive Notice Under Companies Act, 2013. Characteristics of Debentures: (1) The debenture holders get interest at a fixed rate. In the case of redeemable debentures, one can redeem the amount at the time of maturity. Artificial Legal Person: A company is an artificial legal person. Features & Characteristics Of A Company. Unit -1 Preliminary, Incorporation Of Company, Prospectus and allotment of securities, Share capital and debentures. (b) Registration and denominations. It is an instrument in writing. COMPANY LAW. Company Law Objectives: The objective of the course is to understand and evaluate the legal framework of Corporate Environment in India and to gain elementary knowledge of Indian Corporate Law. (3) The debenture holders are the creditors of the company and in the event of winding up of the company. Companies issue debentures extensively because debt capital is cheaper to raise. These instruments are issued as either preference shares or debentures to begin with and are convertible into equity shares of the Indian company at a later date. Shares have no charge on the assets of the company. Debentures are generally secured. Return of Capital Shares are non-repayable during the life-time of the company except in some cases. Debentures are redeemable either at a fixed date or at option of the company during the life-time. The history of the Indian Company Law began with the Joint Stock Companies Act of 1850. Also read | The Techniques of … Irredeemable Debentures: These debentures are also called as Perpetual Debentures as the company doesn’t give any attempt for the repayment of money acquired or borrowed by circulating such debentures. Chapter 1 Memberships AND Members Rights. Incorporated association. Borrowing Powers and Debentures, 10. The Trust exists for the sole purpose of issuing the preferred securities and investing the proceeds in the company's 8% Junior Subordinated Deferrable Interest Debentures, Series A (Subordinated Debt Securities) due … 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. A debenture is a document which shows on the face of it, that the company has borrowed a certain sum of money from the holder thereof upon certain terms and conditions. A company has to fulfil requirements in terms of documents (MOA, AOA), shareholders, directors, and share capital to be deemed as a legal association. COMPANY LAW 4 The Capital of a Company CONTINUED Debt Capital: Debentures and Charges LECTURE They are a certificate of debt, with the date of redemption and amount of repayment mentioned on it. The main distinction is that when a person purchases business shares, he or she becomes a part-owner of the firm, whereas when an individual purchases company debentures, he or she becomes a creditor of the company. But a company enjoys all the rights of a natural person. DEBENTURES. . Definition of Company: According to Prof. Haney, “ A company is an artificial person created by law, having separate entity, with perpetual succession and common seal. Former Chief Justice of the United States, Justice John Marshall, said, “A company is an artificial being, invisible intangible and existing only in contemplation of law.”. It differs significantly from equity or other types of shares. Topics 1. Top 10 Characteristics or Features of Preference Shares. Saloman’s case established beyond doubt that in law a registered company is an entity distinct from its members, even if … (d) During depression, the profit of the company goes on declining and it becomes difficult for the company to pay interest. Definition of company, characteristics of company, lifting the corporate veil, company distinguished Debentures provide a fixed rate of interest to debenture holders. (2) The company may have profit or no profit, the debenture holders receive interest. The main characteristics of a company are : 1. The holders of these types of debentures are entitled to receive interest at a fixed rate only out of current year profit. Features & Characteristics Of A Company. Brief History of Company Law in India and England … 10 . Further the stock of Public Limited Company can be acquired by anyone through IPO or via trades. As security for the shares in the company, Salomon obtained debentures from the company. Company Law subject … Saloman’s case established beyond doubt that in law a registered company is an entity distinct from its members, even if … Dividends for Preference share holders. A debenture is a form of bond or long-term loan which is issued by the company. Company Seal. Nature and Characteristics of a Company ... 3 Historical Development of Concept of Corporate Law in … The doctrine of Indoor Management is an exception to it.. Preference shareholders enjoy a priority over equity shareholders in payment of dividends. Cons of debentures Cons for the lender. ... debentures first in priority to unsecured creditors. The debenture typically carries a fixed rate of interest over the course of the loan. Topics 1. 2.1 Debentures – meaning and characteristics. Let's take a look at the various types of debentures companies can issue. Debentures are debt instruments. Every law has a reason to exist. Companies and Partnerships Compared (a) A company can be created only by certain prescribed methods - most What distinguishes between bonds in a legal sense is the collateral pledged and the legal rights to this collateral. It is issued by the company under its common seal; Debentures can be both secured or unsecured; The rate of interest and the date of payment is pre-determined; Debentures issued are freely transferrable by debenture holders; Debenture holders do not get any voting right in the company; It gives the right to vote in the matters of the company and the right to claim their share in the profits of the company. The Companies Act, 1956 has not defined as to what debenture means. It is likely therefore that the meaning of debentures remains contextual. Explain and Learn, Negotiable Instruments: Definition, Characteristics, and Features! A Public Limited Company is a company with limited liability and offers shares to the general public. The company is the only medium of organising business which is given the privilege of raising capital by public subscriptions either by way of shares or debentures. Consequently, despite Gloster L.J. The shares represent ownership of the shareholders in the company. (at para. Sub-section 84 of Section 2 of the Companies Act 2013, defines “Shares” as, “Share” means a share in the share capital of a company including stocks. CS Executive Paper 2 New Syllabus 2017 Company Law Characteristics of Debenture Lecture by CS (Dr.) Himanshu Srivastava Scanner Classes. Debentures, like other bonds, may make periodic interest payments known as coupon payments. Updated October 29, 2020: Debentures in company law may refer to secured debentures, unsecured debentures, registered debentures, bearer debentures, redeemable debentures, irredeemable debentures, and convertible debentures. the public is invited to subscribe to the shares or debentures of the company. 1. A debenture is generally issued as a part of a series. The sole asset of the Trust is the $154,640,000 principal amount of 8.3% Junior Subordinated Deferrable Interest Debentures, due 2037, issued by KCPL.. Characteristics of a debenture: 1. LAW (LLB) Oct 4, 2015. A company as an entity has several distinct features, which together make it a unique organization. Thereafter, a cumulative process of amendment and consolidation brought us to the most comprehensive and complicated piece of legislation, the Companies Act, 1956. Under the CA 2016, a private company is required to have the following characteristics: It is a company limited by shares (s42(1)) It has not more than 50 shareholders (s42(1)) It restricts the transfer of its shares (s42(2)) It cannot offer its shares or debentures to the public (s43(1)). Characteristics of a debenture: 1. Characteristics of company The characteristics of a company are: 1) Incorporated association: A company must be incorporated or registered under the Companies Act. These debentures are issued for specific purposes. A debenture holder cannot vote in the company meetings. Definition of Public company. Debenture holders don’t have any voting rights in the company meetings. Company Definition. Income Debentures. The following are the defining characteristics of a company :- ... On incorporation under law, a company becomes a separate legal entity as compared to its members. Debentures are a long-term source of finance. Debentures issued in settlement of insurance claims under this subpart shall have the same characteristics and the same requirements for registration and redemption as those issued pursuant to subpart B of this part except that debentures shall bear interest at the rate in effect as of the date the commitment was issued, or as of the date the loan was first endorsed for … Floating / Raising capital 6. Prospectus, 8. The … 4. Debentures are issued in appropriate series and are the obligation of and issued in the name of the particular mortgage insurance fund under which the mortgage is insured. It is operated and managed by a 'board of directors' which are elected by shareholders. 2. These debentures are repayable on the closing up of an enterprise or on the expiry (cessation) of a long period. 177, 196. Issue of Debentures. The company is the only medium of organising business which is given the privilege of raising capital by public subscriptions either by way of shares or debentures. If a company issues debentures, details of debenture holders are maintained in a debenture holder register. Course: Company Law 2 (UCL3622) Charges. Their equity characteristics include: Gaining or losing value with the underlying stock. Generally, the debentures are to be repaid at a definite time as stipulated in the issue. A company thus has legal rights and obligations in the same way that a natural person does. Definition of Company: According to Prof. Haney, “ A company is an artificial person created by law, having separate entity, with perpetual succession and common seal. The debenture is a certificate that the company issues under … Subsequently, the company went bankrupt. The main characteristics of a company are : 1. ICSI House, 22, Institutional Area, Lodi Road, New Delhi 110 003 ... debentures and other securities; calls; share certificates and share warrants. . COMPANY ACT 1956 CONTENTS 1. Company Law Journal : Company Law Journal (India) Pvt. Debentures are financial instruments through which companies can raise debt. - A char ge is a common form of securi ty registered in favour of the financial institu tion in. A convertible debenture is a type of hybrid security with characteristics of both debt and equity instruments. Shares and Types/Kinds of Shares in Company Law in India Reference • Chapter IV (Sections 43 to 72) of the Companies Act, 2013 on Share Capital and Debentures It is created by law and having a separate existence of its own. Characteristics of the Prospectus: It is a document by which the company procures its share capital needed to carry on its activities; It is an invitation to a member of the public i.e. Limited company is an artificial person. 3. On the company’s winding up it was found that its remaining assets were insufficient to satisfy both its debenture holders and its trade creditors. The conversion may occur in one of two ways: either at the option of the investor, or compulsorily (without any option whatsoever). Types of Debentures. The company is different and distinct from its members in law. The most usual form of borrowing by a company is by a company is by the issue of debentures. Or it may on-lend your money to another business. Companies Act (Amendment) 2001 has stipulated the requirements in respect of creation of trust deed, appointment of debenture trustees, their duties, liability of the company to create security and redemption reserve. Hopefully, these provisions would result in offering real protection to debenture. An oral promise in acknowledgement of a debt is not a debenture. Mention any three characteristics of the company. Debentures are a long-term strategy for a firm to raise funds. Limited liability: As a company has a separate legal entity, its members cannot be held liable … In this article we will discuss major characteristics of a Public Limited Company. Characteristics of Debentures 3. Company Law study material includes company law notes, company law book, courses, case study, syllabus, question paper, MCQ, questions and answers and available in company law pdf form.. Company Law Notes. Convertible debentures share both equity-like and fixed-income characteristics. 3. The company might use your money to finance a range of investment activities. On the basis of definitions studied above, the following are the characteristics of a company: 1. Registration and Incorporation 3. Incorporated association: A company comes into existence when it is registered under the Companies Act (or other equivalent act under the law). It is an acknowledgement of the indebtedness of the company to its holder for the amount stated in it. Debentures usually have a charge on the assets of the company, which means that if the company goes into liquidation and is not able to repay the amount, the debenture holders can also sell the property of the company through the legal process under the applicable law to recover the money of the debenture holders.
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