ILLEGAL ASSOCIATION

-

Section 464 of Companies Act, 2013 defines that no association or partnership consisting of more than 50 persons [fixed vide rule 10 of Misc Rules 2017] shall be formed to carry on any business for gains unless it is registered under the companies Act 2013.


But, there are certain exceptions to the above statement:

1. Entities legally registered under other a law such as  LLP or HUF.

2.Not for profit Organisation formed for promoting Literary, scientific, or other charitable association.

Consequences of Illegal association:

1. No legal existence.

2. Unlimited Personal liability of members

3. Fine. May extend up to 1 lakh [section 464(3).

However, such illegal association is liable to income tax on profit earned by it. (Gopal Ji & Co vs Commr. Of Income Tax, 1931)

Further, it remains illegal in spite of subsequent reduction of members till it gets registered (Madanlal vs. Jankiprashad) and subsequent registration will not alter the position of past act (Gujarat Trading Co. Vs Tricumji)

Comments

Post a Comment

Please do not enter any spam link in the comment box

Popular posts from this blog

New form MGT-6 w.e.f. July 15, 2024

-
Image
Only a natural person can be a beneficial owner while reporting e-form MGT-6? It seems so from MCA recent notification on this. MCA has introduced new MGT-6 e-form (" MGT-6 ") on 15th July 2024 which is web-based form. The purpose of MGT-6 is to report details of persons who is registered owner and beneficial owner respectively by a company. There are scenarios where there is a need to file this MGT-6. One of such scenarios is when a company incorporates wholly owned subsidiary (Say, private limited company). This means total shares held by holding company. But, you may know that minimum two members are required in a private limited company. So in such case, holding company nominates a person (say, its employee) to hold share for such statutory requirement whereas beneficial interest in such share is held by holding company only. So, this is a brief background of MGT-6. There are two attachments to this MGT-6 which are submitted to a company: MGT-4 : This is submitted by reg...
Read more

CLOSE WATCH OVER INVESTMENT FROM CHINA-DECODED-CS ROHIT KUMAR

-
Image
As we are aware that after COVID-19 share prices of most of Indian Companies are trading at very low price and China wants to acquire shares of such companies at low price to control most of Indian Companies. Therefore, Government of India has reviewed the extant FDI policy for curbing opportunistic takeover/acquisitions of Indian companies and accordingly amended para 3.1.1 of Consolidated FDI Policy 2017. REVISED POSITION : A non-resident entity can invest in India, subject to the FDI Policy except in those sectors/activities which are prohibited. However, an entity of a country, which shares land border with India or where the beneficial owner of an investment into India is situated in or is a citizen of any such country, can invest only under the Government route. Further, a citizen of Pakistan or an entity incorporated in Pakistan can invest, only under the Government route, in sectors/activities other than defence, space, atomic energy and sectors/activities prohibited for fore...
Read more

AYODHYA JUDGEMENT-SUMMARY

-
Image
Ayodhya judgement resolved the long pending tussle  between Hindus and Muslims. Resolving this religious fight was not an easy task for Hon'ble Supreme Court (" SC "). Drawing  evidences from the muted history were the most herculean task for the SC, though observations of High Court was very much helpful for the SC to end this religious fight which started from 1856-7 . Writing crux of this judgement was not any easy task for me as well because this judgement spreaded over 1045 pages   and discussed numerous issues  and when I was reading and making summary, the problem before me was what to include or what not? But to reduce this judgement into readable strength, I mainly focused on core question which was the bone of contention.  Further, for the sake of authenticity I have written page numbers of this judgement against paragraphs ( wherever required ) so that you can cross-verify or read in detail if you feel so. The bone of contention before the SC was...
Read more