Week 11 & 12 Company Law

8/3/2019 Week 11 & 12 Company Law

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Department of

Management

Sciences

By

Muhammad Naveed Chohan

Saturday, May 05, 2012

CORPORATE LAW

Week 11 & 12Company Law and Regulation:

An Introduction


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Outline

Saturday, May 05, 2012 2

Introduction to Company Law

Jurisdiction of Courts under Company Law

S.E.C.P as a Regulator

Kinds of Companies


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3

What is meant by Company/Joint Stock Company?

Joint stock company is an artificial person, recognised by law, with

a distinctive name, a common seal, a common capital,

comprising transferable shares, carrying limited liability having aperpetual succession

Company means a company formed and registered under this

ordinance or an existing company

Section 2(1) (7) of Companies Ordinance, 1984

Existing company means a company formed and registered under

any previous Companies ActSection 2(1) (5) of Companies Ordinance, 1984


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What is meant by Company/Joint Stock Company?

A company is an association of many persons who contribute

money or money worth to a common stock and employ it for

some common purposeLord Justice Lindley


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Distinctive Features of a Company/ Joint Stock Company:

Artificial Person

Recognized by Law

Distinctive Name

Common Seal

Transferable Shares

Limited Liability

Perpetual Succession


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An Overview of History:

Some forms of companies inAncient Rome and Ancient Greece

First recognizable commercial associations wereMedieval Guides

Commercial enterprise under the lex mercatoria were in fact partnerships

UK

Companies emerged at the end of 16th Century

Regulation to companies were given charter

Rise of Joint Stock Companies

Various Acts: 1720, 1825, 1837,1844, 1855, 1856, 1862, 1867, 1890, 1900,

1907..

Pakistan

Companies Act 1913 and Independence

Companies Ordinance 1984 and amendments in 2002


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Object of Company Law in the Shape of Companies Ordinance 1984:

Consolidation and amendment of law

Healthy growth of corporate entities

Fix minimum standards of Integrity and promotion of management

Prevent misconduct and malpractices Protections of shareholders

Enforce proper duties

Require discloser of information

Adjustments of rights

Empower government


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Jurisdiction of Courts under C/L


What is Company Court?

Company court means a court having jurisdiction under

Companies Ordinance, 1984Section 2(11) of Companies Ordinance, 1984

Jurisdiction: (U/S 7 and 8)

High Court (H.C Benches will be constituted by Chief Justice of High Court)

Federal government can authorize civil courts to deal with corporate matters

Jurisdiction of civil court and registered office of the company

Longest period of registered office and territorial jurisdiction of civil court


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Jurisdiction of Courts under C/L


Proceedings of Company Court: (U/S 9)

Judgment within 90 days

Day to day hearing of case

Reason of delay in proceedings

No adjournment more than the 14 days and 30 days in proceedings Court follow summary proceedings

Appeal: (U/S 10)

Order of company courtPaid up capital more than one (1) million

Supreme Court Order of company courtPaid up capital less than one (1) millionif SC

allow it than

Order of company courtNo Paid up capitalif SC allow it than

Disposing of Appeal in 90 days


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SECP as a Regulator


Law: Securities and Exchange Commission Of Pakistan (SECP) Act, 1997

Meaning of Commission: (U/S 2 (6 -A ) of Companies Ordinance, 1984)

(Section 2 (g) of SECP Act, 1997)

Corporate Law Commission constituted under Section 3 of SECP Act, 1997

Constitution of Commission: (Section 11 of Companies Ordinance, 1984)

(Section 3 of SECP Act, 1997)

Commission will be a body corporate

Federal Government is empowered to constitute it

Not being less than 3 members

Appointed by Federal Government

One of the member is chairman also appointed by Federal Government


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SECP as a Regulator



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SECP as a Regulator


Functions of Commission: (U/S 12 of Companies Ordinance, 1984)

Under Companies Ordinance 1984

Under Federal Government directions

Appointed by Federal Government

One of the member is chairman also appointed by Federal Government Federal Government can also appoint officers to assist SECP

Officers will follow orders of SECP

Powers of Commission:

Order of production and examination of documents Ask to furnish information for proceedings or enqiury

Issue order, instructions and directions to all officers

Confirm alteration in Memorandum

Adjourn Proceedings


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Kinds of Companies


On the Basisof

Incorporation

On the Basisof Liability

On he Basisof Number of

Members

Statutory Company Charted Company Registered Company Listed Company

On the Basisof Ownership

Company Limited byShares

Company Limited by

Guarantee Unlimited Company Association not for

Profit

Public Company Private Company Single Member Company

Holding Company Subsidiary Company

Associated Company Foreign Company


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Kinds of Companies


On the Basis of Incorporation:

When the company is registered that process is called incorporation of the company

1. Chartered Company:

Chartered granted by Crown

For example East India Co. , Bank of England

Business of the company is explained by Charter

2. Statutory Company:

Formed by Special Act or under Order of head of state

For the utilities of public Purpose is to provide services and not to earn profit

These companies do not have memorandum and articles

For example SBP,ADBP, PR, PIA, WAPDA etc.


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Kinds of Companies


On the Basis of Incorporation:

When the company is registered that process is called incorporation of the company

3. Registered Company:

Formed under Companies Ordinance ,1984

Formed under earlier previous Acts

Most popular mode of incorporation

Memorandum and Articles of Association

Get powers from law

3. Listed Companies: Securities are listed

Allowed to trade in stock exchange

Preparation of quarter accounts ONE MONTH BEFORE (U/S 245)

Filing of copies of accounts to commission and to stock exchange (U/S 245)


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Kinds of Companies


On the Basis of Liability:

Defines the liability of members or company as a whole

1. Company Limited by Shares: (U/S 15)

Members limited up to the nominal value of the share purchased by them

Paid full nominal value of share hold by him his liability is nil

2. Company Limited by Guarantee: (U/S 15)

Limited liability of the members

Each member undertake to pay in the event of winding up of the company

Kinds: (a) Company Limited by Guarantee and having a share capital(b) Company Limited by Guarantee and not having share capital

For example Karachi Stock Exchange (KSE), Lahore Stock Exchange (LSE) ..


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Kinds of Companies


On the Basis of Liability:

Defines the liability of members or company as a whole

3. Unlimited Company: (U/S 15)

Liability of the members in the company is unlimited

Show purpose of the registration

No existence in present


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Kinds of Companies


Association not for profit: Purpose not to earn profit

Under section 42 these companies are registerd

Not add the words Ltd. or (Pvt.) Ltd. or Guarantee Ltd

o Condition of the Association not for Profit: Promotion of useful object

Profits applies their objects

Not pay dividend

Condition binding on association

Condition includes in documents

Licence is granted by Federal government

Insert in MOA and AOA regulations of Federal government

o Advantages:

o Application for Licence:


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Kinds of Companies


On the Basis of Number of Members:

1. Single Member Company:

Single member is shareholder

At least one director

Also required to have one director

Companies add SMCat the end of the name

2. Private Company:

At least 2 persons

Not exceed 50 Articles of association restrict transfer of shares

Shares are not offered to general public

Companies add (Pvt.) Ltdat the end of the name

Privileges of private company..............

Loss of Privileges..............


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Kinds of Companies


On the Basis of Number of Members:

3. Public Company:

Public company means a company not a private company

At least 3 persons

Maximum unlimited shareholders

Shares can be transferred from one person to other it means to general public

Companies add the wordLtd. at the end of the name


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Kinds of Companies


On the Basis of Ownership:

1. Holding Company:

Hold 50% shares of other company

Control over the board of directors

Advantages of holding company..............

2. Subsidiary Company:

Other company hold 50% of its shares

Other Company has control over the board of directors

3. Associated Company: Not a subsidiary company but works in close connection

It is also called associated undertaking

4. Foreign Company:

Incorporated outside the Pakistan and carries business in Pakistan

Week 11 & 12 Company Law

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