Minimum subscription - commencement of business, Business Law and Ethics

Minimum subscription - Commencement of business:

If the minimum subscription was not raised the company can only commence business or exercise borrowing powers if:-

a)      there has been delivered to the registrar for registration a statement in lieu of prospectus;

b)      Every director of the company has paid to the company, on each of shares taken or contracted to be taken by him and for which he is liable to pay in cash, a proportion equal to the proportion payable on application and allotment on the shares payable in cash; and

c)      there has been delivered to the registrar for registration a statutory declaration in Form No.212 by the secretary or one of the directors that condition b) above has been complied with.

The registrar shall, on delivery to him of the relevant form, or statement in lieu of prospectus, certify which of the company is entitled to commence business. The certificate is conclusive evidence that the company is entitled to commence business.

Section III (4) provides that any contract made by a company before the date at which it is entitled to commence business shall be provisional just, and hence shall not be binding on the company awaiting that date. This provision is somewhat ambiguous and it is not clear whether the "provisional" contract binds the other party.

In Re "Otto" Electrical Manufacturing Co (Clinton's Claim) it was held that the company was not liable to pay for the goods which had been sold to it before it obtained the trading certificate. Since it was put into liquidation before obtaining the certificate, the contract did not "become binding" and the liquidator had therefore rightly rejected the claim.

S.219 (c) provides that a company which does not commence its business within a year from its incorporation may be wound up by court.

Section III does not apply to a private company which may therefore legally commence its business as soon as it is incorporated.

Posted Date: 1/12/2013 3:16:00 AM | Location : United States







Related Discussions:- Minimum subscription - commencement of business, Assignment Help, Ask Question on Minimum subscription - commencement of business, Get Answer, Expert's Help, Minimum subscription - commencement of business Discussions

Write discussion on Minimum subscription - commencement of business
Your posts are moderated
Related Questions
Raising Of Capital: In commercial parlance, the word 'capital' is generally used to denote the amount by which the assets of a business exceed its liabilities. Conversely, in

Mr. Hellerstein is a professor at Tahoe Law School located in Tahoe California. He lives in Nevada and commutes to Tahoe Law School, which is only a 50-mile, commute one way.  Duri

Liability:             The secretary is an officer of the company and thus he owes fiduciary duties to the company which are similar to those of a director, eg. he must act in

Give detail explanation of Credibility problem There are indications that such credibility problem stems from a tension between the goal of encouraging innovation and investme

QUESTION 1 Evaluate the circumstances under which an employer would be justified in terminating his worker's contract of employment under the Employment Rights Act QUESTION

Part A Companies can raise finance by borrowing money and securing the debt by way of fixed or floating charge. Using case law in your answer explain what is the distinction b

Explain the first kind of treaty Under international law, treaties primarily serve three separate purposes, though any one treaty may perform more than one function. The first

QUESTION 1 Enumerate and comment upon the number and nature of the grounds on the basis of which a citizen may challenge the decision of a public body. Illustrate your answer w

The three regimes:- i. Right over Territorial Waters: The right over territorial waters extends up to 12 nautical miles (NM) from the baseline of a coastal state. Territorial w

Here, we have outlined the utility of National Building Code. We have explained the main features of Factories Act. Some of the provisions of Electricity Act and Rules which are re