Professional Documents
Culture Documents
1 The concept of company was developed in the 2nd half of 19th century
(1850 onwards).
2 Different laws were developed during this era.
3 The first act was passed in the British India in 1850 for the
registration of joint stock co’s.
4 Another act for the registration of joint stock co\s in the UK in 1884
5 A complete and basic act of 1913 was developed.
6 A company law commission was appointed by the Pakistani govt in
1959
7 The submitted their report to the govt in 1960.
8 Its contents was made publically available in 1972
9 The title of the report was the company law commission of Pakistan
10 At least in 1984 Pakistan has developed its own complete law for their
co’s in the form of “company ordinance 1984”
Eight schedules:
1. regulation of a Co’s ltd by shares
memorandum of association
article of association
2. Matters to be specified by prospectus. rules and regulations
3. Form and context of annual return report.
4. balance sheet and profit and lost account of listed co’s
5. balance sheet and profit and lost account of non-listed companies
6. Fees to be paid to the registrar. Authority. And federal Govt
7. The detail of enactment (to give a practical shape)
8. Amendments
A.Promotion stage:
a. Best offer
Here the underwriting firms take the commission they try their
level best to flowed the company shares and also advertise
Here Risk is beared by company
b. Firm commitment.
Here the underwriter makes full payments and purchase all the
shares…Risk is totally beared by underwriting i.e. investment
bank
2. Investment advices
It simply means to provide advices to banks, govt etc and also to
the small businesses.
Acquisition: can’t loose its separate legal identity and take the liabilities and
assets of the company in their sharing amount.
Incorporation stage
To get the certificate of incorporation from the registrar of joint stock
company. The promoters must submit the following necessary documents to
the registrar.
1. memorandum of association
2. articles of association
3. notice of the address of the head office
4. list of directors
5. consents in writing of directors
6. directors contract to purchase qualification shares(directors have to
purchase)
7. statutory declaration of legal documents of incorporation
* Here are two more steps involve in case of public ltd company i.e.
b) Article of association.
It is also known as supplementary or secondary document of the co. It is
used for the internal matters/management of the company. Articles of
association must be signed by each subscriber.
Transfer of share: when the person is mentally sound and sale out his
shares (dispose off).
The memorandum lay down the objects Article lay down the manner in which the
of the company. object is to be fulfilled.
Memorandum is the dominant If any part of article conflict with it,
instrument. such part of article is to be deemed as
void.
If memorandum is silent on a point.
Article explains that point.
If memorandum is clear on a point.
Then there is no need that the article
supplements that memorandum.
Contents of prospectus
I.The contents of memorandum with the name, address, occupation and
description of the person who’s names (their in memorandum), the
nature and the extent of interests of the shareholders in the profit and
property of the Company.
II. Description of business to be undertaken
III. Description regarding remuneration of the directors or chief
executive officer
IV. The names, address, occupation and description of the
important office bearers of the company.
V. Where shares are offered to the public for subscription,
information regarding minimum subscription, preliminary expenses
payable and underwriting commission payable etc.
VI. The date and time of opening and closing subscription list
VII. The names of the underwriters and directors opinion about them
that their resources are sufficient to fulfill their obligation
VIII. The names, addresses, description and occupation of the
company vendors and the amount paid or payable to them.
IX. The estimated amount of preliminary expenses paid or payable
by the company
X. Any amount paid to the promoters in previous two years.
XI. The names and addresses of auditors and legal advisors.
XII. The right of voting of meeting and dividend attached to shares.
XIII. The length of time during which the business of the company
has been carried on.
XIV. A reasonable time and place for the inspection of balance sheet
and income statement.
XV. A summery in column from the earnings of the company for
each 3 financial years.
XVI. Pending legal proceedings to which the Company is a party.
Liabilities arising from mis-statement in a prospectus
1. civil liability
he who is the director at the time of issue of prospectus, he who
has authorized the issue of prospectus, he who is the promoters of
the company , shall be liable to pay compensation to all those
person who has subscribed to the shares and suffered from mis-
statement.
2. criminal liability
Where a prospectus includes any untrue statement, every person
who signed or authorized the issue of prospectus shall be
punishable with imprisonment which may extend to 2years or with
a fine which may extend to RS 10000 or with both.
Company Benches
There shall be benches in each high court , one or more benches , each to be
known as company bench , to be constituted by the chief justice of high court,
to exercise the jurisdictions under the company ordinance 1984.
Share certificate
It is a document issued under the common seal of the company and
contains
1 Name and address of the holders
2 Name of shares held by them
3 Their distinctive numbers
4 Paid of amount.
Register of members
It contains:
a) The name, father/husband’s name, address, nationality and occupation
b) Statement of shares held by each member, their distinctive numbers,
paid up amount.
c) The date at which any person was entered as a member of the CO.
d) The date at which any person was ceased to be a member and reasons
of ceasing.
Rights of members.
1. Inspect register of members and debenture holders.
2. In case of public ltd company, they will receive a statutory report.
3. have copies of memorandum and articles on payment of fee
4. receive share certificate with in prescribed time
5. transfers of shares
6. Receive minutes of the proceedings of general meeting.
7. Remove directors.
8. Receive copies of annual accounts.
9. Appoint auditors at general meeting.
10.Inspect auditors report at general meeting.
11.Resolve by special resolution that the company ay be wound up by the
court.
12.Resolve by special resolution that the company may be wound up
voluntarily.
13.Appoint and fix remuneration of liquidators.
14.attend meetings and vote at meeting
15.Approved dividend as recommended by the directors.
16.Have a share in the capital of a company.
Capital structure
The combination of debt and equity financing in the capital of a
company is called capital structure.
While a particular amount of money with which the business is
started is share capital.
Company directors
Directors includes any person occupying a position of a director, the position of
a director by whatever name called every private company must not less then
two directors and every public company not less then 7 directors .
Directors having power to issue shares.
First directors are appointed by promoters
A company can’t make loan to its directors.
Directors as an agent
The director may make contracts as agent of the company if the contract made
by a director ultra-vires his power made with a member is only voidable but if
made with an outsider who had no notice of the wants of his power, it is binding
on the company.
Director as trusty
Directors are trustee regarding the power conferred on them by the articles
and the capital under their control. They are not persons in the employment of the
company. They are trustee for the company and not for the individual share
holders they are not trustee for third party who have made contract with the
company they are also trustee for the company in respect of their power of
approving transfer of shares, issuing and allotment of shares as well as making
calls and forfeiting of shares.
Eligibility of a person to become a director
A person is appointed as a director if he:
is a major share holder
is of sound minded
is a member of a company
has not been convicted by court of law
is a solvent person
is a natural person
Power of directors
1. To make calls on share holders in respect of money unpaid on their shares.
2. To issue shares.
3. To issue debentures.
4. To borrow money otherwise then on debentures.
5. To invest the funds of the company.
6. To make loans.
7. To approve annual, semiannual, or periodical accounts as are required to be
circulated to the members.
8. To incur capital expenditure exceeding Rupees 2 lac on any single item or
dispose off a fixed asset of value exceeding rupees 1 lac.
* will friends there is much more on this subject but I wrote upto here coz I m
having my exam and I do not have more time to write any more. I will try to write
after my exam In-sha-Allah. Hope this little piece of mine will help u all a lot, I
dedicate it to my kindest and hardworking teacher Sir Muhammad Arif.