General clsp

Contingent Liability

Liability may or may not

incurred

Relates to Future

liability

Relates to past event

Not recording is required in

Books of Accounting

Disclosure is required in Accounts

Body Corporate• All Companies incorporated in Pakistan • All Companies incorporated outside Pakistan • Does not include

– Corporation Sole– Cooperative Society– Any body corporate, which is not a company

mentioned in Companies ordinance, even it is a body corporate the Federal Government right to exclude it as Body Corporate by notification in office Gazette.

Body Corporate

All Companies

Include

Incorporated In Pakistan

Incorporated Outside Pakistan

Does not Include

Cooperative Society

Sole Cooperation

Any body corporate, which is not a company mentioned in Companies ordinance, even it is a body corporate the Federal Government right to exclude it as Body Corporate by notification in office Gazette.

Financial Institution

Company or Financial

Institution

Whether Established

Under Special enactment

Operating inside / Outside

Pakistan

Doing BankingBusiness

Include

House Financing CompanyInvestment Banks

MudarbaLeasing

Venture Capital CompanyFinancing Company

NBFCCODE= HIM – LVFN

Federal Government by notification in official Gazette

specify

Sole Cooperation • Public office (created usually by an act of parliament) or ecclesiastical

office (usually the owner of church land) that has a separate and continuing legal existence, and only one member (the sole officeholder).

• Contract made with a corporation-sole continues from one officeholder to his or her successor or, if made during a vacancy in office, to the appointee.

• Just read and enjoy.

Common Seal

• Every company must have its common seal• It is not a rubber stamp• It is embossed on documents only on the

authority of a resolution of Directors.• It shall be affixed to share Capital• Directors must provide Safe Custody of

Common Seal

Capitalization of Profit

• Instead of Cash Dividend when Shares are issued (Bonus Shares/Stock Dividend) to Shares Holders.

• Same a right issuance but here no cash is taken but shares are given to members.

Related Parties

Related Party Transactions

• Company must maintain• Nature of related party (Holding/ Subsidiary/

Associated)• Nature of transaction (Sale/Purchase/

Investment)• Amount of transaction • Terms & Conditions of transaction

How to become Holding Company

By way of Investment in

other company

If Management of one company is also holding

Management of other Company

by Holding of Management

by Holding of more than

50% shares

Purchase of Shares

Holding Company

Subsidiary Company

Buy Shares of its Subsidiary

Can further Can not

Buy Shares of its Holding

If subsidiary buys shares of holding then it becomes BUY BACK. Which is prohibited

How to become Associate Company

By Investment more than 20%

in other company



Holding and Subsidiary

• A private company can be subsidiary of Public company• A public company can be subsidiary of Private company• A private company can be subsidiary of Private company• A public company can be subsidiary of Public company

• A private company can be Holding of Public company• A public company can be Holding of Private company• A private company can be Holding of Private company• A public company can be Holding of Public company

•

How to become Holding Company

By way of Investment in

other company



by Holding of Management

by Holding of more than

50% shares

How to become Associate Company

By Investment more than 20%

in other company



Company

ABC Limited

XYZ Limited

Share Capital 500,000

Shares Holders

Mr. A 5,000Mr. B 10,000Mr. C 35,000Mr. D 50,000Mr. E 300,000Mr. F 100,000


Shares Holders

Mr. W 20,000Mr. X 10,000Mr. Y 10,000Mr. Z 9,000ABC Limited 51,000

ABC Limited is the Holding Company of XYZ Limited

Investment of ABC

Limited is more than

50%

Xyz is subsidiary of ABC Limited

Company

ABC Limited

XYZ Limited


Shares Holders



Shares Holders

Mr. W 20,000Mr. X 10,000Mr. Y 10,000ABC Limited 60,000

ABC Limited is the Holding Company of XYZ Limited

Investment of ABC


50%

Xyz is subsidiary of ABC Limited

Company HOHO(Pvt)

Limited

HEHE Limited


Shares Holders



Shares Holders

Mr. W 20,000Mr. X 10,000Mr. Y 10,000HOHO (Pvt) Limited 60,000

HOHO (Pvt) Limited is the Holding Company of HEHE Limited

Investment of HOHO

(Pvt) Limited is more than

50%

HEHE remains public limited

Company

ABC Limited

VIP (PVT)

Limited


Shares Holders



Shares Holders

Mr. W 20,000Mr. X 10,000Mr. Y 10,000ABC Limited 60,000

ABC Limited is the Holding Company of VIP (PVT) Limited

Investment of ABC


50%

Now laws of public limited will be on VIP

Company

ABC Limited

XYZ Limited


Shares Holders



Shares Holders


ABC Limited is the Associated Company of XYZ Limited

Investment of ABC


20%

Company

ABC Limited

XYZ Limited


Shares Holders



Shares Holders


ABC Limited is nothing of XYZ Limited

Investment of ABC

Limited is less than

20%

Company

ABC Limited

XYZ Limited

Management/ Director

Mr. A Mr. B Mr. C Mr. D Mr. E Mr. F

ABC Limited is an Associate XYZ Limited

As Maximum Management

of ABC on the Board of Director of

XYZ so XYZ is Subsidiary


Mr. X Mr. Y Mr. C Mr. D Mr. E Mr. F

Company ABC (pvt)

Limited

XYZ Limited



ABC (pvt) Limited is an Associate of XYZ Limited

As Maximum Management

of ABC(pvt) Ltd on the Board of Director of XYZ

so XYZ is Subsidiary



Company

ABC Limited

XYZ (pvt)

Limited



ABC Limited is an Associate of XYZ (pvt) Limited

As Maximum Management of ABC Ltd on the Board of

Director of XYZ so XYZ (pvt) Ltd

is Subsidiary



Associated Undertaking

• A private company can be Associate of Public company

• A public company can be Associate of Private company

• A private company can be Associate of Private company

• A public company can be Associate of Public company

Classification of Capital

Paid UpCalled

ISSUED

SUBSCRIBED by public

AUTHORIZED / NOMINAL/ REGISTERED

UNISSUED

UNSUBSCRIBED by public

Uncalled

Unpaid Up

Shares Transfer and TransmissionDescription Transfer Transmission

Exercise Voluntary Operation of Law

Example Sales/ Gift/ Barter Death / insolvency

Consideration to Owner of Shares

In case of Sales/ Barter, owner receives Cash or value. In case of Gift it is not present

No Consideration

Recording New name in Member Register

Upon receive of transfer deed

Upon Certificate of Insolvency or Death Certificate

Stamp Duty fees Paid Not paid

Certificate

Certificate of Incorporation Certificate of

Commencement of Business

Both Private & Public Company get it from

RegistrarOnly Public Company gets it

from Registrar after taking COI and meeting other

requirements

Utilization of Premium on shares issued

Writing off

Preliminary Expenses

Commission Paid

Discount allowed

Issuance of Shares &

Debentures

Issuance of Bonus Shares

Providing for the Premium on redemption

Preference Shares /

Debentures

Preparation & Printing of MOA, AOA, and other Documents,

Payment of Capital Duty, Initiative expenses, lawyers fee, etc

Issue of Shares not in Cash • Value of asset must be determined by Engineer

• Engineer must be registered with Pakistan Engineer Council (PEC)

• Engineer must be at least in the panel of two Financial Institution

• Past & current Depreciation shall be reduced from Value of Asset

• Intangible asset are not accepted against Shares only

• Tangible assets are accepted against Shares

• Certificate from Chartered Accountant shall be obtained for the compliance

• Code CV-TIPE

Beneficial Interest or Beneficial Owner

Mean

When any person holds 10% or more than 10% in the Capital of

the Company

Director Any Person Officer

Shall inform to the Company within 15 days

If he has become Beneficial Owner of the Company

Every Director CEO Secretary Chief

Accountant AuditorManaging Agent

Shall submit to Registrar by filling out Form 31 within 1- 30 days and mention

In Public listed Company

Any one of the below is beneficial Owner

Information pertaining to the beneficial ownership of such shares/securities

Person directly or indirectly

hold 10% or more share in company

In case of change in future he shall also submit information on Form 32 to registrar within 1-15 days

Form 31 & 32 to be submitted by Beneficial Owner

From 31Submission within 1-30

days

Form 32

within 1-30 days

When a person becomes beneficial

owner

After becoming beneficial owner

When member further Purchase

shares

When member sales shares

Form 31 to be submitted

First time Subsequently

When first time a member owns 10% or more shares

of the company

Sometimes a member sales that much shares which reduces his 10% holding

He submits form 32, then he again buys shares and his holding again reaches to 10% or more

Now again form 31 is to be submitted

Stock Exchange(Organized Market for Shares & Debentures

Private Company Unlisted Company

Listed Company

Trade on Does not Trade On

Shares of Following Companies

Redeemable Capital

Includes

Participatory Terms Certificate

PTC

Mushrikah Certificate

Term Finance Certificate TFC

Such Instrument specified by

Federal Govt in Official Gazette

Any other security not

based of Interest other than Shares

Obtain of Finance

Purpose of Issue

Representing in

Denomination

Instrument

Called Face Value

Evidence of Investment

Important clauses of AOA of a private

Company

Restriction Prohibition Limitation

Transfer of shares

Subscription of shares &

Debentures to General Public

Of members from 2 to 50

excluding employees

NOTE AOA : IF IBA HAD DEW CAP ARE FOR BOTH PRIVATE AND PUBLIC

COMPANIES

Registers • Fixed Assets• Members• Debenture Holders• Directors, Officers• Directors Interest• Mortgage• Proxy Register

CONVERSION OF Public Company into Private Company • Board Meeting• Calling of Members Meeting• Pass Special Resolution by Members• Approval from SECP• Add RPL in AOA• Reduce Members if they are more than 50• Add “Private” Limited after the name of Company• Submit SILOP to ROC within 14 days after

conversion


Company


Transfer of shares




excluding employees


COMPANIES

RPL

CONVERSION OF Private Company into Public Company • Board Meeting• Calling of Members Meeting• Pass Special Resolution by Members• Approval from SECP• Remove RPL from AOA• Increase Members if they are less than 3• Remove “Private” after the name of Company• Intimation to ROC within 14 days after conversion


Company


Transfer of shares




excluding employees


COMPANIES

RPL

WINDING UP COMPANIES

Contributory

Contributory - the term ‘ contributory ‘ is defined every person liable to contribute to the assets of a company in the event of its being wound up.

The expression includes the holder of any shares which are fully paid up.

A past member shall however be not liable to contribute if he ceased to be a member for one year or more before the commencement of the winding up.

Winding up of Companies

Compulsory Winding up

Voluntary Winding up subject to supervision of

Court

Voluntarily Winding Up

without supervision of

Court

By Passing Special Resolution

By Passing Ordinary Resolution




Court



Court

Director files Statement of

Solvency

Members Voluntarily winding Up

Does not files

Statement of Solvency

FileStatement

of Solvency

Creditor Winding Up

Voluntary Winding Up

Without supervision of

Court

With the supervision of

Court

When an application is

made by

Company Liquidator Creditors Contributory

By Passing Special

Resolution

By passing Ordinary

Resolution



Voluntary Winding up subject to

supervision of Court


without supervision

of Court

Members Voluntarily winding Up

Creditor Winding Up

WINDING UP PROCESS

Life of company ended

Properties of Company

administered for benefits of

The Members of the company

The Creditors of the company

Compulsory Winding Up

After lapse of 1 year from the

date of COI

Business of company is not

operative

When Public Company

Does not

Hold Statutory Meeting

File Statutory Report to

ROC

No of members reduced

Public below 3

Private below 2

SMC below 1Code:-2 LUMS-FSCLapse of one Year after COI no business started or suspend business for whole yearListed Company becomes unlisted CompanyUnable to pay DebtsMembers reduced below statutory requirements Special Resolution passed by Members to wind upFail to File of Statutory Report to ROCStatutory Meeting not Held in time Court on the ground of Just and Equity


Members passes Special

resolution

To winding up company

Company unable to pay debts

If the court is of the

opinion

On the grounds of

Just & Equity

To wind up Company

Code:-2 LUMS-FSCOLapse of one Year after COI no business started or suspend business for whole yearListed Company becomes unlisted CompanyUnable to pay DebtsMembers reduced below statutory requirements Special Resolution passed by Members to wind upFail to File of Statutory Report to ROCStatutory Meeting not Held in time Court on the ground of Just and Equity Business is carried on otherwise than Object of company.

Compulsory winding up “Book of accounts are not properly maintained, misfeasance,

malfeasance in relation to company

Requirements For Investigation.

Illegal Or Fraudulent Affairs Of Company Are Found fraudulent,

Dead Lock In The Management.

An Aggressive Policy Is Adopted By The Principal Shareholders Towards The Minorities.

Losses: When The Business Of The Company Carried Except At Loss.

CODE :- BRIDAL


Date of starting

When petition is presented to

Court

Until court passes order of Winding Up

The company has to comply all the requirements of Companies Ordinance

The corporate status and the

corporate powers of the Company shall continue

until it is dissolved.

Code:-2 LUMS-FSCOLapse of one Year after COI no business started or suspend business for whole yearListed Company becomes unlisted CompanyUnable to pay DebtsMembers reduced below statutory requirements Special Resolution passed by Members to wind upFail to File of Statutory Report to ROCStatutory Meeting not Held in time Court on the ground of Just and Equity Business is carried on otherwise than Object of company.

Procedure for winding up

Date of commencement of winding up - date on which the

petition is presented to court.

As such, Until winding up order is made , the company will have

to comply with the requirements of the companies act as are

required if company not wound up.

However in case if voluntary winding up the winding of the

company is deemed to have commenced at the time of the

passing of the resolution.

HEARING OF COURT

BEFOREHearing Of The

Petition

the provisional liquidators are

appointed.

to safe guard the assets of the

company

notices issued to all concerned parties.

Intimation

Official Liquidator.

ROC

HEARING OF COURT

Make An Order For Winding Up The Company

The Court May Dismiss It

With or without Cost

Adjoin The Hearing

Conditionally Or Unconditionally

Make Any Interim Order

That Court Thinks Fit

Or Any Order Court that thinks fit.

Consequences of Winding up order

the court must, as soon as the winding up order is made, cause intimation thereof to be sent to the official liquidator and the registrar

The petitioner and the company must also file with the registrar within 30 days a certified copy of the order.

In case the certified copy is not filed the petitioner is fined.the registrar should take the minutes in his book and notify in the

official Gazette that such order has been made.

The order for winding up is deemed to be a notice of discharge to the officers and the employees except when the business is continued.

Suits against the company are stayed, unless the court gives leave to continue or commence proceedings.

All power of the board of directors cease and the same are then exercised by the liquidator.

On the commencement of the winding up the limitation ceases to run in favour of the company.

Any disposition of the property of the company and any transfer of shares in the company are then void.

Official liquidator, by virtue of his office becomes the liquidator of the company and takes possession and control of the assets of the company.


• Any distress or execution put in force without the court orders are void.

• Any type of sale or floating charge created within the period of proceedings are void.

• Statement of affairs to be made to the liquidator

• Order of Dissolution by the Court -thereafter the company has no existence





Court



Court

By Passing Special Resolution

By passing Ordinary Resolution

. Voluntary winding up Voluntary Winding up - Winding up by the members or

creditors without any intervention of the Court is called voluntary winding up.

a company may be wound up voluntarilyby Ordinary or Special resolutionby Ordinary or Special resolution..------------------------------------------------------------------------------------------------------------------------------------------------------------

By passing an ordinary resolution in general meeting

a. where either the time fixed by the articles for the duration of the company has expired OR

b. the event specified in the Articles has occurred on which the company is to be dissolved.

Voluntary winding up (cont) In any other case, the company may

resolve to be wound up voluntarily by passing a special resolution in general body meeting of shareholders.

• A voluntary winding up is deemed to commence from the time the resolution for voluntary winding up is passed.

• when the company has passed the resolution for voluntarily winding up, it must within 10 days, give notice in official gazette and also in some newspapers in the

Consequences of Voluntary Winding-up

• A voluntary winding up is deemed to be commence at the time when the resolution for voluntary winding up is passed.

• The company ,from the commencement of the winding up, must cease to carry on its business except so far as may be required to secure a beneficial winding up.

• The transfer of shares and alterations in the status of members, made after commencement becomes void.

• A resolution to wind up voluntarily operates as notice of discharge to the employees of the company.

• On the appointment of the liquidator all the powers of the board of directors shall cease except after the permission of the registrar.

Types of voluntary winding upTypes of Voluntary Winding up - Voluntary winding up may be of two

types, namely,

a) Members’ voluntary winding up ;

b) Creditors’ voluntary winding up.

Members’ Voluntary Winding up - Members’ voluntary winding up is possible only in case of solvent companies.

1) DECLARATION OF SOLVENCY The directors must enquire whether the company will be able to able to pay all its

debts within the period of 3 years.In order to be effective, this declaration must be made within 5 weeks

immediately preceding the date of passing of the winding up resolution by the members;

delivered to the Registrar for filing ; and must be accompanied by a copy of the report of the auditors of the company on

the accounts and balance sheet.

• Appointment and remuneration of liquidators: the company in general meeting must:a) appoint one or more liquidatorsb)fix the remunerationany remuneration so fixed cannot be increased in any circumstances whatever, whether with or without the sanction of the court. No liquidator shall charge of his office unless his remuneration is fixed.

• Board’s power to cease: On the appointment of the liquidators all the powers of the directors cease but their powers may continue if the general body or the liquidator sanctions it.

• Notice of the appointment of the liquidator to be given to the registrar(S493):within 10 days of his appointment .otherwise Rs.1000 fine per day.

• Power of liquidator to accept shares, etc., as consideration of sales of property of the company:

• Duty of liquidator to call creditors meeting in case of insolvency: if the liquidator finds that the company will not be able to pay its debts he should tell it to the creditors with all records.

• Duty of liquidator to call general meeting at the end of each year: In case the winding takes more then one year the liquidator must call a general meeting and tell the acts and winding operations done by him.

• Final meeting and dissolution: the liquidator must(a)make up an account of the winding up showing how the company has been disposed of (b)call the general meeting of the company for laying the account before it as well as explanations.

Creditors Voluntary Winding Up

• Creditors’ voluntary winding upCreditors’ voluntary winding up -

• Where the Board of directors does not file a declaration as to solvency of the company, the voluntary winding up is called ‘ the Creditors ‘ voluntary winding up.

• - if the members and creditors nominate two different persons as liquidators, creditors’ nominee shall become the liquidator of the company.

• - Besides, in the case of creditors’ winding up, if the creditors so wish , a ‘ committee of inspection ‘ may be appointed to work along with the liquidator's.

• Notice to registrar: A company of any resolution passed at the creditors meeting must be filed with the registrar within 10 days of the passing thereof otherwise fine of 500 Rs per day.

• Appointment of liquidator: the creditors and the members at their respective first meeting may nominate a person to be liquidator but should take the board of directors into considerations.

• Committee of inspection: The creditors at their first or any subsequent meeting, appoint a committee of inspection of not more than 5 members.

• Fixing of liquidator’s remuneration: the remuneration of the liquidator is fixed by the committee of inspection.

• Board’s power to cease on appointment of liquidator: all the powers of the directors should go to the liquidator.

• Duty of liquidator to call meeting of company and creditors at the end of each year within 3 months from the end of the year.

• Final meeting and dissolution

Voluntary winding up under supervision of the

court

- A voluntary winding up may be effected under supervision of the Court where an application to that effect is made by a creditor or a contributory or the company or the liquidator and the Court makes an order that the voluntary winding up should continue subject to the supervision of the Court.

• Such an order is passed by the Court where • (i) the resolution for winding up was obtained by fraud, or • (ii) the rules relating to the winding up order have not

been observed, or• (iii) the liquidator is prejudicial or is negligent in

collecting the assets.

• The Court is also empowered to make an order for compulsory winding up superseding the order of winding up under its supervision.

General clsp

Law

Transcript of General clsp