Liabilities for Mis-Statements in Prospectus

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:

  1. The statement included in the prospectus is misleading in the form or in the context in which it is  included; and
  2. There is an omission from the prospectus of any matter which is calculated to misled [Sec.65(1)].
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Company Meetings

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.… Read the rest

Statutory Meeting of a Company

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.… Read the rest

Motions and Resolutions

A ‘motion’ is a definite proposal put before a meeting for its consideration and adoption. A  ‘resolution’ on the other hand is the formal expression of the decision of a meeting. When a motion has  been duly voted upon and passed by a majority, with or without amendment, it is called a ‘resolution’. A  resolution once adopted and recorded in the minutes becomes the official decision of the meeting and  cannot be rescinded or revoked except by the consent of two-thirds majority in a meeting specially called  for the purpose.

Kinds of Resolutions 1. Ordinary Resolution

A resolution which is passed by a simple majority of votes cast by members present in person or  by proxy is called ‘ordinary resolution’.… Read the rest

Preparation of Minutes under Companies Act

‘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.… Read the rest

Directors of a Company

A company, though a legal entity in the eyes of the law, is an artificial person, existing only in  contemplation of law. It has no physical existence. It has neither soul nor a body of its own. As such, it  cannot act in its own person. It can do so only through some human agency. The persons who are in  charge of the management of the affairs of a company are termed as directors. They are collectively  known as Board of Directors.

The Companies Act defines a ‘director’ as “any person occupying the position of a director by  whatever name called” [Sec.2(13)].… Read the rest