DEFINITIONS IN

COMPANIES ORDINANCE 1984

Article.

"articles" means the articles of association of a company as originally framed or as altered in accordance with the provisions of any previous Companies Act, or of this Ordinance, including, so far as they apply to the company, the regulations contained in Table A in the First Schedule;

Associated Companies

"associated companies" • A company whose 20 % or more shares (up

to 50%) are held by another company shall be considered an associated company of that company.

Body corporate"Body corporate" or "corporation“It means a setup having separate existence distinct from its member. In includes company incorporated in Pakistan and out side Pakistan, but does not include the following

i. a corporation sole; or ii. a co-operative society registered under any law

relating to such societies; or iii. any other body corporate, other than a company

defined in this Ordinance, which the Federal Government may, by notification in the official Gazette, specify for this purpose.

Book and/or Paper"book and paper", "book or paper" or "books of accounts" include – accounts, deeds, vouchers, – registers, writings and documents maintained on paper or

computer network, floppy , magnetic cartridge tape, CD, rom or any other computer readable media.

Chief Executive and Commission• "chief executive", in relation to a company means an

individual who, subject to the control and directions of the directors, is entrusted with the whole, or substantially the whole, of the powers of management of the affairs of the company, and includes a director or any other person occupying the position of a chief executive, by whatever name called, and whether under a contract of service or otherwise;

• “Commission” means the Securities and Exchange Commission of Pakistan established under section 3 of the Securities and Exchange Commission of Pakistan Act, 1997 (XLII of 1997);]

Company • "company" means a company formed and registered

under this Ordinance or an existing company; • "company limited by shares" means a company having

the liability of its members limited by the memorandum to the amount, if any, unpaid on the shares respectively held by them;

• "company limited by guarantee" means a company having the liability of its members limited by the memorandum to such amount as the members may respectively thereby undertake to contribute to the assets of the company in the event of its winding up;

Court, Debenture and Director • "the Court" means the Court having jurisdiction under

this Ordinance • "debenture" includes debenture stock, bonds, 2[term

finance certificate] and any other securities, other than a share, of a company, whether constituting a charge of the assets of the company or not;

• "director" includes any person occupying the position of a director, by whatever name called:

Document and Existing Company

• "document" includes summons, notice, requisition, order, other legal process, voucher and register;

• "existing company" means a company formed and

registered under any previous Companies Act;

Financial Institution• “financial institution” includes:–

i. a company or an institution whether established under any special enactment and operating within or outside Pakistan which transacts the business of banking or any associated or ancillary business through its branches;

ii. a modaraba, leasing company, investment bank, venture capital company, financing company, housing finance company, a non-banking finance company; and

iii. such other institution or company authorised by law to undertake any similar business, as the Federal Government may, by notification in the official Gazette, specify for the purpose;]

Financial year, Form and Holding company

• "financial year" in relation to any body corporate, means the period in respect of which any profit and loss account or the income and expenditure account of the body corporate, laid before it in general meeting, is made up, whether that period is a year or not;

• "form" means a form set out in any of the schedules as prescribed.

Listed Company and Member• "listed" in relation to securities, means securities which have

been allowed to be traded on a stock exchange; • "listed company", means a company or a body corporate or

other body whose securities are listed; • "member" means, in relation to a company having share capital,

a subscriber to the memorandum of the company and every person to whom is allotted, or who becomes the holder of, any share, scrip or other security which gives him a voting right in the company and whose name is entered in the register of members, and, in relation to a company not having a share capital, any person who has agreed to become a member of the company and whose name is so entered;

Memorandum, Modarba and Officer

• "memorandum" means the memorandum of association of a company as originally framed or as altered from time to time in pursuance of the provision of any previous Companies Act or of this Ordinance;

• "modaraba" and "modaraba company" have the same meaning as in the modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980 (XXXI of 1980);

• "officer" includes any director, chief executive, managing agent, secretary or other executive of the company, howsoever designated, but, save in sections 205, 220 to 224, 260, 261, 268, 351, 352, 412, 417, 418, 474 and 482, does not include an auditor;

Previous Companies Act

• "previous Companies Act" includes any Act or Acts relating to companies in force before the Indian Companies Act, 1866 (X of 1866), or the Acts repealed thereby, the Indian Companies Act. 1866 (X of 1866), the Indian Companies Act, 1882, (VI of 1882) the Indian Companies Act 1913 (VII of 1913), or any law corresponding to any of those Acts and in force in any of the territories now constituting Pakistan before the extension of the Companies Act, 1913 (VII of 1913), to such territories;

Private Company• "private company" means a company which, by its

articles,— i. restricts the right to transfer its shares, if any; ii. limits the number of its members to fifty ;and iii. prohibits any invitation to the public to subscribe for the

shares, if any, or debentures of the company:

Provided that, where two or more persons hold one or more shares in a company jointly, they shall, for the purposes of this definition, be treated as a single member.

Prospectus and Public Company• "prospectus" means any document described or issued

as prospectus, and includes any notice, circular, advertisement, or other communication, inviting offers from the public for the subscription or purchase of any shares of a body corporate, or inviting deposits from the public, other than deposits invited by a banking company or a financial institution approved by the Federal Government, whether described as prospectus or otherwise;

• "public company" means a company which is not a private company;

Registrar, Scheduled Bank and Secretary

• "registrar" means a registrar, an additional registrar, a joint registrar, a deputy registrar or an assistant registrar, performing under this Ordinance the duty of registration of companies;

• "scheduled bank" has the same meaning as in the State Bank of Pakistan Act, 1956 (XXXIII of 1956);

• "secretary" means any individual appointed to perform the secretarial, administrative or other duties ordinarily performed by the secretary of a company;

Security• "security" means – any share, – scrip, – debenture, – participation term certificate, – modaraba certificate, – musharika certificate, – term finance certificate bond, – pre-organization certificate or – such other instrument as the Federal Government may, by

notification in the official Gazette, specify for the purpose

• "share" means share in the share capital of a company;• Share is a right to receive a certain proportion of profit

made by a company while it is a going concern and of the capital when it is wound up.

Share and Ultra Vires• Share means share in the share capital of a company;– Share is a right to receive a certain proportion of profit made

by a company while it is a going concern and of the capital when it is wound up.

• Ultra Vires means an act performed without any authority to act on the subject.

Special Resolution• "special resolution" means a resolution which has been

passed by a majority of not less than three-fourths of such members entitled to vote as are present in person or by proxy at a general meeting of which not less than twenty-one days notice specifying the intention to propose the resolution as a special resolution has been duly given:

Provided that, if all the members entitled to attend and vote at any such meeting so agree, a resolution may be proposed and passed as a special resolution at a meeting of which not less then twenty-one days notice has been given;

Subsidiary and Holding Company• Meaning of "subsidiary" and "holding company". For

purposes of this Ordinance, a company or body corporate shall be deemed to be a subsidiary of another if— i. that other company or body corporate directly or indirectly

controls, beneficially owns or holds more than fifty per cent of its voting securities or otherwise has power to elect and appoint more than fifty per cent of its directors; or

ii. the first mentioned company or body corporate is a subsidiary of any company or body corporate which is that other's subsidiary;

Where Ordinance is not applied• Ordinance not to apply to certain corporations .-

Nothing in this Ordinance shall apply to—

i. a trading corporation owned or controlled by a Province and carrying on business only within that Province; or

ii. a co-operative society; or iii. a university.

Non Trading Companies• Application of Ordinance to non-trading companies

with purely provincial objects.-

• The powers conferred by this Ordinance on the Federal Government or the Commission shall, in relation to companies which are not trading corporations and the objects of which are confined to a single Province, be the powers of the Provincial Government.

Ordinance to override memorandum..

• Ordinance to override memorandum, articles, etc..- Save as otherwise expressly provided herein,— a) the provisions of this Ordinance which come into force by virtue

of a notification under sub-section (3) of section 1 shall have effect notwithstanding anything contained in the memorandum or articles of a company, or in any contract or agreement executed by it, or in any resolution passed by the company in general meeting or by its directors, whether the same be registered, executed or passed, as the case may be, before or after the coming into force or the said provisions; and

b) any provision contained in the memorandum, articles, agreement or resolution aforesaid shall, to the extent to which it is repugnant to the provisions of this Ordinance, become or be void, as the case may be.

Artificial Person

• It means that a company possesses separate legal entity, identify and personality of its own, apart form its share holders.

• It can borrow money, enter into contracts, and hold property in its own name

• It can sue and can be sued by its share holders.

Auditors

• Auditors are independent persons who examine the accounts of the company and report on the same.

• The express their opinion on the accounts and also supposed to detect fraud, manipulations of accounts aimed at concealment of true financial position of a company.

Common Seal

• Every company must have a seal of its own, called “Common Seal”. – Directors must provide for its safe custody. – it shall be affixed to share certificate and any other

instrument, only on the authority of a resolution of directors.

Convenant

• An agreement convention, or promise of two or more parties, by deed in writing, signed and delivered by which either of the parties pledges himself to the other that something is either done, or shall be done, or shall not be done, or stipulates for the truth of certain facts.

• In the broadest usage, it means any agreement or contract.

Fiduciary and Fiduciary Behavior

• Fiduciary This term used to refer a person having duties involving good faith, trust, special confidence, and candor towards others.

• Fiduciary Behavior it refers to the behavior in good faith, trust, special confidence, and candor towards others.

Incorporated Association

• Incorporation means the recognition of the existence of a company, in the eyes of law as a separate legal entity.

• IPSO FACTO It meansa) By fact it self; orb) By the mere factc) By the mere effect of an act or a fact

Limited Liability

• It means that the liability of the members of the company to pay back the debts of the company is limited upto the face value of their shares.

• The fact of limited liability stems from the fact of company being an artificial person. Liabilities for repayments of loans tend to be divided between company and the share holders.

Par Value/ stated Value

• Par Value/ stated Value is the face or stated value of a share or stock or bond is called par value.

• Perpetual Succession means that a company possesses permanent life which is not affected by debt, insolvency, insanity or withdrawal of any of its members.

Prima Facie

• Prima Facie it means– At first sight– On the first appearance – Presumably

• Successor in Interest One who follows another in ownership or control of property. In order to be a successor in Interest a party must continue to retain the same rights as original owner without change in owner ship and there must be a change in form only and not in substance and transferee is not a successor in Interest.

Successors and Team of Management

• Successors Those persons, other than creditors who are entitled to a property of a deceased under his will or succession statute.

• Team of Management Share holders, being the entrepreneurs, are owners of the company and as such have the right to manage the company. But owing to their large number, they delegate most of their managerial powers to their elected representatives.

Team of Management

• Team of Management is constituted as follows– Chairman– Chief Executive– Board Of Directors– Share holders– Secretary– Chief Accountant– Managers and other functionaries

Upcoming

• Courts, SECP and Registrar