NATURE AND TYPES OF COMPANIES IN INDIA AND UAE - A COMPARITIVE STUDY

PRESENTATION BY ANHAR SALIH

WHAT IS A COMPANY?
A Company is an association or collection of individuals or a group of people. Company members share a common purpose and unite in order to focus their various talents and organize their collectively available skills or resources to achieve specific, declared goals. A company can be defined as an "artificial person", invisible, intangible, created by or under Law, with a SEPARATE legal entity, perpetual succession and a common seal. It is not affected by the death, insanity or insolvency of an individual member.

COMMERCIAL COMPANIES LAW 1988 UNITED ARAB EMIRATES

FEDERAL LAW NO. (8) OF 1984 AS AMENDED BY FEDERAL LAW NO. (13) OF 1988 COMMERCIAL COMPANIES

ARTICLE (4)
A company is a contract under which two or more persons are committed to participate in profit - making economic venture either with funds or efforts and to divide between them profit or loss arising from such venture .

ARTICLE (5)
A company established in the U.A.E shall adopt either or of the following types: 1. 2. 3. 4. 5. 6. 7. General Partnership. Commandite Joint Venture. Public Joint stock. Private Joint stock . Limited Liability companies. Commandite Limited by shares

GENERAL PARTNERSHIP

IT IS A FIRM WHICH CONSISTS OF TWO OR MORE PARTNERS WHO ARE JOINTLY AND SEVERALLY RESPONSIBLE FOR ALL THE FIRMS LIABILITIES. PARTNERSHIP COMPANIES ARE CONFINED TO UAE NATIONALS ONLY BECAUSE PARTNERS ARE RESPONSIBLE TOWARDS THE LIABILITIES OF THE FIRM BY ALL THEIR ASSETS, WHICH MAY NOT BE APPLIED TO FOREIGNERS AS IN MOST OF THE CASES THEIR ASSETS ARE USUALLY ABROAD.

COMMANDITE (Simple limited partnership).

It is a firm consisting of one joint partner or more who is liable with all his money for the firm and THE another partner or PARTNERS shall not be responsible for the liabilities of the firm except to the value of his share in the capital. According to law, all joint partners in such type of firms should be nationals of the UAE.

JOINT VENTURE

A Joint Venture is a type of company where two or more partners agree by contract to share the profits or losses of one or more commercial enterprises, which will be carried on in the name of one of the partners. Contract of Joint Ventures may be written or oral and not required to be notarized. Third parties can recourse only to the partners with whom they deal. However, should the Joint Venture is disclosed to the third parties, all the partners are liable to the third parties. Existence of Joint Venture may be proved by any method of proof

PUBLIC JOINT STOCK

Public Shareholding Company is a company with a capital divided into equal negotiable shares. IN SUCH COMPANIES A SHAREHOLDERS LIABILITy IS limited by the number of shares held by him. Minimum capital required to form a Public Shareholding Company is AED 10 million (US $ 2,724,796) with a nominal face value of AED 1 100, and for a banking entity it is AED 40 million and insurance and investment companies is AED 25 million.

PRIVATE JOINT STOCK

A PRIVATE SHAREHOLDING COMPANY IS INCORPORATED BY A NUMBER OF PERSONS NOT LESS THAN THREE. UNLIKE PUBLIC SHAREHOLDING COMPANY, A PRIVATE SHAREHOLDING COMPANY CANNOT INVITE THE PUBLIC FOR SUBSCRIBING IN ITS SHARES. THE MINIMUM SHARE CAPITAL TO FORM A PRIVATE SHAREHOLDING COMPANY IS AED 2 MILLION. (US $ 545,405). THE CHAIRMAN AND MAJORITY OF THE DIRECTORS IN A PRIVATE SHAREHOLDING COMPANY MUST BE UAE NATIONALS.

LIMITED LIABILITY COMPANY

A Limited Liability Company is the most common form of business entity currently formed in UAE. A limited liability company can be formed by a minimum of two and a maximum of 50 persons whose liability is limited to their SHARES IN THE COMPANyS CAPITAL. THE MINIMUM equity participation by UAE national is 51%. Capital required to form a limited liability company in Dubai is AED 300,000 (US$ 81,744) contributed in cash or in kind. However, in other Emirates viz., Abu Dhabi, Sharjah, Fujairah etc., the capital requirement is AED 150,000 (US$ 40,872).

COMMANDITE LIMITED BY SHARES

A COMMANDITE OR Partnership Limited with Shares is a company formed by general partners who are jointly liable to the extent of all their shares for the company liabilities and participating partners who are liable only to the extent of their shares in the capital.

INDIAN COMPANIES ACT 1956 REPUBLIC OF INDIA

FEDERAL LAW NO. (8) OF 1984 AS AMENDED BY FEDERAL LAW NO. (13) OF 1988 COMMERCIAL COMPANIES

TYPES OF COMPANIES IN INDIA

1. On the basis of incorporation 2. On the basis of liability 3. On the basis of control

CHATERED COMPANY

A Company incorporated under a special charter granted by the Queen of England is CALLED CHARTERED COMPANy. THE COMPANy IS regulated by its Charter and Companies Act does not apply to this kind of company. The Charter also prescribe the nature of Business and the power of the Company. Examples : East India Company and Bank Of England

STATUTORY COMPANY

A Statutory Company is one which is created by a Special Act of Parliament or a state legislature. For achieving the purpose of public utility. The nature and the power of such companies are laid down in the special Act under which they are created. Memorandum of Association is not required. NOT REQUIRED TO USE LIMITED AFTER ITS NAME.

Examples : RBI, UTI, LIC, State Bank of India.

REGISTERED COMPANY

A Registered Company is one which is registered in accordance with the provisions of the Companies Act, 1956 and includes the existing Companies formed under any other law. Comes into existence by receiving the certificate of Incorporation. Governed by the Companies Act ,1956.

Registered Company IS DIVIDED INTO TWO PUBLIC COMPANY PRIVATE COMPANY

SECTION 3 (1) (iv)

Public company means a company which is Either : not a private and has a minimum paid-up capital of Rs. 5,00,000 or such higher paid-up capital as may be prescribed;
Is a private company which is a subsidiary of public company. On the basis of Incorporation Public Company.

 There is no restriction on the number of members. However, the maximum number of members depends upon the number of shares allotted.

Public company may be A company limited by shares A company limited by guarantee An unlimited company.

 In case a public company is a limited company, THEN IT MUST ADD THE wORD LIMITED AT THE END of its name. It must have minimum at least 7 members. It must have at least 3 directors.

Under Section 12(2)(a) liability of its members is limited by its Memorandum to the amount unpaid on the shares respectively held by them. If member of the company pays a full amount on shares then his liability would be nil.

SECTION 3 (1) (iii)

A Private Company means a company which has a minimum paid up capital of Rs. 1,00,000/- or such higher paid up capital as may be prescribed by its articles
Restrict the right to transfer its shares, if any. Limits the number of the member to fifty.

 Prohibits any invitation to the public to subscribe for any shares in or debenture of the company. Prohibits any invitation or acceptance of deposits from persons other than its members, directors or its relatives

[Section 12(2)(b)] A company in which the liability of its members is limited by its Memorandum to such amount as the members may respectively undertake to contribute to the assets of the company in the event of its being wound up. For the purpose of Commerce, science, art, religion, charity or any other useful objects. Features: The liability of its members is limited up to the amount Guaranteed by them. Such liability can be enforced only after the commencement of winding up of the company and not during the lifetime of it.

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