The Chief Justice of India, Shri Chandrachud, observed as follows

“Even though the entire share capital of the appellant companies has been subscribed by the Government of India, it cannot be predicated that the companies themselves are owned by the Government of India. The companies which are incorporated under the Companies Act, have a corporate personality of their own, distinct from that of the Government of India. The land and buildings are vested in and owned by the companies; the Government of India only owns the share capita1.”

A Government company can even sue the Government in its own name as a litigant. But, since protracted litigation between a Government company on the one hand and a Government department on the other, results in waste of public money and other resources including time, such disputes are resolved, as far as possible, outside the juridical process.

However, if a Government company is an authority, it shall be equivalent to a State and then it must also accept the obligations of the State.

How should it be determined as to whether a government company is an instrumentality or agency of the government or not? Justice Bhagwati felt that it was not possible to evolve a straight formula by which corporations could be classified into those which are instrumentalities of government and those which are not.

Legul Position of ..Share Warrunt Holder

Legul Position of ..Share Warrunt Holder. When a sbare warrant is issued in respect of any sbares, the name of shareholder is struck out from the

register of members, and the following particulars are entered in the register:

(a) the fact of the issue of the warrant:

(h) a statement of tbe shares specified in the warrant, distinguishing

each share by its number; and

© the date of the issue of tbe warrant. [Section 115(1)]

The holder of a share warrant is not strictIy a member of the company,

but the articles generally provide that the holder of a share warrant should be treated as a member of the company and can attend tile company meetings

and have voting rights. In such a case, the warrant holder bas to deposit the share warrant with the company at least two days before the meeting. The

receipt of depositing the warrant empowers tbe warrant holder to attend and vote at the meeting. He can get back the warrant after returning the receipt

rSec. 1I5]. The holder of share warrant cannot qualify bimself for the appointment of a director.

Dividend on Shure Wiarnmt. Sec. 114 (1) expressly authorises the company to provide for the payment of dividend on sbare warrants by attaching

a company is 110t compulsory in the following cases

(i) A pirate company is not required to issue a prospectus.

(i i) Even a public company need not issue a prospectus if the promoters or direct )rs feel that they can mobilize resources through personal relationship

and contacts. In such cases, the company is required to file a statement called ‘Statement in lieu of Prospectus’ with the Registrar of Companies. [Sec
56 (3b)]

(iii) A public company. not having share capital. (iv) When shares are offered to underwriters under an underwriting agreement [Sec. 56 (3) (a)].

(v) Where the shares debentures c)re offered to the existing members debenture-holders [Sec. 56 (5) (a)].

(vi) Where the shares or debentures are in all respects, uniform with shares debentures previously issued and dealt in unquoted on a recognized stock exchange.

State the remedies :”,ail able to a person who has been induced to tal{e shares’ by miss-statement in a Prospectus, specifying the conditions under which and the Iverson’s against whom such remedies are avertable.

What remedies are available to the allotted of shares against the company for miss-statement in a I)prospectus?

Memorandum and help in achieving the objects given in the Memorandum

Articles are subordinate to the Memorandum and help in achieving the objects given in the Memorandum. They define the duties, the rights and the powers

of the Board of Directors and also the manner in which the business of the many is to be carried on. However, being subordinate to the Memorandum,

they cannot extend the :objects as defined in the Memorandum. The Articles define the area within which the shareholders may make such rules and

regulations for their own management as they think fit but not beyond the area defined by the Memorandum. Moreover, these rules should not
go beyond the provisions of the Companies Act. Every company except the public company limited by shares must frame its own Articles. However, a

public company limited by shares may either frame its own Articles or adopt Table A (Model rules) as given in the Companies Act. This chapter gives the

rules regarding Articles of Association.

COMPANY VS. PARTNERSHIP

Distinguish between a Company and a Partnership finny. Ans.
Points of Distinction Company Partnership's
1. Registration
2. membership
3. Status
4. Regulation Act
5. Property
6. Liability
Registration of a 1irm is not compulsory. Minimum 2 persons constitute a partnership. The maximum number of members in the case of a firm is fixed at
10 for banking business and at 20 for any other business.
A tirm has no separate legal status.
Partnership firm is governed by the provisions of Indian Partners:ip Act, 1932.
Property of the firm is the property of the partners.
Registration of a company is compulsory under the Companies Act.
Minimum 2 and maximum 50 constitute a private limited company and minimum 7 and maximum unlimited constitute a Public .Limited Company.
A company has a separate legal existence cf its own and is considered a separate person from its members.
A company is regulated by the Companies Act, 1956. .
Property of the company belongs only to the company and not to its shareholders.
In partnership each partner In a company, a shareholder has unlimited liability and is has limited liability-limited personally liable for all the to the extent of
the unpaid debts of the firm. amount on the shares held by him or the amount guaranteed by him.
7. Documents
8. Mutual Agency
9. Management
8. Transfer of Interest
9. Audit
10. Winding up