Company Law and LLP Law: Personality, Directors and Remedies
This domain covers the Companies Act, 2013 and the LLP Act, 2008, testing incorporation, corporate personality, directors' duties and shareholder remedies.
Corporate personality
Salomon v Salomon: the company is a distinct legal person. The veil is lifted only in specific situations - fraud, tax evasion, sham or kitting out, enemy character, public interest and express statutory provisions.
Constitution of the company
MOA (name, objects, capital, liability) and AOA form the contract between company and members and among members. The doctrine of ultra vires applies to the MOA. The certificate of incorporation is conclusive. Private company: minimum 2 members, maximum 200; public company: minimum 7, no maximum.
Directors
Minimum 3 for a public company, 2 for private, 1 for OPC; DIN is mandatory; disqualifications under s.164 (undischarged insolvent, fraud conviction and similar). Duties codified in s.166: good faith, due care, avoidance of conflict, no secret profit.
Shareholder protection
Section 241 relief for oppression and mismanagement before the NCLT; s.242 powers include regulating affairs, purchase of shares and winding up. Minority protection also runs through class rights and s.245.
LLP
A body corporate with perpetual succession and separate legal personality; partner liability is limited to agreed contribution. Minimum 2 designated partners, at least one resident in India. The LLP agreement governs; default provisions apply in its absence - a hybrid of partnership flexibility and company benefits.
Worked example
A director diverts a company contract to a firm he owns without disclosure. The veil is not pierced for that reason alone, but he is liable for breach of fiduciary duty and the company may recover the profit.
Traps
Directors exercise powers at board meetings unless expressly authorised individually; LLP liability is limited but not a shield for fraud; a private company's exemptions do not remove the requirement of designated partners in an LLP.