Page 233 - DCOM404_CORPORATE_LEGAL_FRAMEWORK

Corporate Legal Framework

Notes ‘managing director’ as a ‘director’ who, by virtue of an agreement with the company or of
a resolution passed by the company in general meeting or by its Board of directors or, by
virtue of its memorandum or articles of association, is entrusted with substantial powers
of management which would not otherwise be exercisable by him.
“manager means an individual who, subject to the superintendence, control and direction
of the Board of Directors, has the management of the whole, or substantially the whole
of the affairs of the company and includes a director or any other person occupying the
position of a manager, by whatever name called and whether under a contract of service
or not”.

Section 318 provides that no compensation for loss of office may be paid by a company to
any director other than the managing director, or wholetime director.
10.10 Keywords

Auditor: The first auditors(s) can be appointed by the Board of Directors within one month of the

date of the incorporation of the company.
Called-up capital: The company may not call up full amount of the face value of the shares. Thus,
the called-up capital represents the total amount called-up on the shares subscribed. The total
amount of called-up capital can be either equal to or less than the subscribed capital.
Issued capital: It is that part of the authorised capital which the company has issued for
subscription. The amount of issued capital is either equal to or less than the authorised capital.
Manager: “manager means an individual who, subject to the superintendence, control and
direction of the Board of Directors, has the management of the whole, or substantially the whole
of the affairs of the company and includes a director or any other person occupying the position
of a manager.

Managing director: managing director’ as a ‘director’ who, by virtue of an agreement with the
company or of a resolution passed by the company in general meeting or by its Board of directors
or, by virtue of its memorandum or articles of association, is entrusted with substantial powers of
management which would not otherwise be exercisable by him
Meaning of Allotment: Offer for shares are made on application forms supplied by the company.
When an application is accepted, it amounts to an allotment. The expression allotment is not defi ned
under the Companies Act. It means and implies a division of the share capital into defi ned shares
of a particular value or of different classes and assignment of such shares to different persons.
The supreme Court in Sri Gopal Jalan and Co. v. Calcutta Stock Exchange Association Ltd. AIR
1964 SC 250 defined allotment as “the appropriation but out of the previously unappropriated

capital of the company of a certain number of shares to a person”.
Paid-up capital: Paid-up capital is the amount of money paid-up on the shares subscribed.
Subscribed capital: It is that portion of the issued capital which has been subscribed for by the
purchasers of the company’s shares. The amount of subscribed capital is either equal to or less
than the issued capital.
10.11 Self Assessment

Fill in the blanks:
1. ................................................................ This is the maximum amount of capital which it is
authorised to raise by issuing shares and upon which it pays stamp duty.

2. Shares are made ........................................ supplied by the company.

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