Q: Discuss the types of companies on the basis of liability ?

 Ans: On the basis of liabilities, the company is divided into three types: 

1. Company limited by shares: The liability of members is limited by shares and is mentioned in the memorandum of association. E.g., If a person buys 10 shares of Rs 100, the liability of company will be of Rs 1000 only( 100 multiplied by 10) if it is unpaid.  If it is paid, there will not be any liability of shareholder. 

According to Section 2 (22) of the Companies Act 2013, a company that is limited by shares refers to a company that has the liability of the members limited by such an amount that is unpaid on their respectively held shares. The company can enact this liability while the company is in existence or as it is ending.

2. Companies limited by Guarantee: The members of the company give guarantee of fixed amount and the liability of member will be at the time of winding of the company. It means that the member or shareholder of the company will pay a certain amount at the time of winding of the company. Section 2(21) of Companies Act 2013 defines companies limited by guarantee.

A company limited by guarantee does not usually have a share capital or shareholders, but instead has members who act as guarantors of the company's liabilities. Each member undertakes to contribute an amount specified in the articles (typically very small) in the event of insolvency or of the winding up of the company.

E.g., If a member gives the guarantee of Rs 2 lakhs , the liability of member will be of Rs 2 lakhs at the time of winding of the company.

3. Unlimited liability : It is mentioned in section 2 clause 92, i.e., 2(92).The liability of members will be unlimited in such companies.

Unlimited liability typically exists in general partnerships and sole proprietorships. 

As defined under clause (92) of section 2 of the Companies Act, 2013 (India) - an unlimited liability means a company not having any limit on the liability of its members. 


Comments

Post a Comment

Popular posts from this blog

Q: Can a private company be company limited by shares ?

Question 1: Rajiv owns a garments shop with his two brothers. They decided to diversify its business by creating a company that will manufacture garments. They are facing some financial difficulties in this regard. For example, they collectively have just Rs. 80,000 as capital. Furthermore, they wish to limit their liabilities because of such financial shortcomings. Can they form a private company under such conditions? Answer: Rajiv and his brothers can definitely incorporate a company under such conditions. Although the Companies Act had previously prescribed a minimum capital requirement of Rs. 1 lakh, this is now omitted. Considering the second condition, they can opt for a company limited by shares or guarantee. Both company limited by shares or company limited by guarantee limit the liabilities.  
Read more

Q: How does the company work as an assessee?

Ans:  The main source of income for the government is tax collection. Under section 2(7) of the Income Tax Act, 1961 , an assessee is a person or company who is liable to pay taxes to the government under the provisions of this act.  To assess means to evaluate.  So, the assessee is a person who has been evaluated for his income as well as for other's person income, for which the assessee will be assessable for the profit and loss experienced by that person. According to the Income Tax Act, they are classified into the following categories: Normal assessee: A normal assessee is a person who will be responsible to pay taxes on his income generated in the fiscal year.  Assessee representative: In the case of a non-resident, juvenile or lunatic person, an another person who will be responsible for paying taxes on income or losses will be the assessee representative.  Deemed representative: Any person who is regarded to be an assessee and pay taxes on behalf of anot...
Read more

Q: How many independent directors are required by public company ?

Ans:  According to section 149(4) of companies act, 2013, every listed public company shall have at least one-third of the total number of directors as independent directors  and the Central Government may prescribe, the minimum number of independent directors in case of any class or classes of public companies. Explanation.—For the purposes of this sub-section, any fraction contained in such one-third number shall be rounded off as one.
Read more