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Company Law > Chapter 1 > Flashcards

Chapter 1 Flashcards

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1
Q

What are the distinguishing features of company? [3+3+4]

A
  1. Separate legal personality:
    Company    ;
    i) can enter into contracts with other persons
    ii) owns its own assets
    iii) personally liable to pay tax on its income (profits).
  2. Limited liability: liability of the owners of a company for the debts of the company is limited to the amount of their investment
  3. Transfer of ownership and perpetual succession:
    i) Any legal person can own shares in a company
    ii) Shareholders can transfer their share in the ownership of the company to someone else
    iii) It does not affect the legal status or legal existence of company.
    iv) Company continues to exist (unaffected by change in ownership)
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2
Q

Define Company (3)

A

A company formed and registered:
- under this Act (Companies Act, 2017)
- or the company law

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3
Q

Company law (4)

A
  • The repealed Companies Act
  • Companies Ordinance, 1984
  • Companies Ordinance, 2016
  • also includes this Act (unless the context provides otherwise)
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4
Q

Body corporate “or” Corporation [3+2]

A

Body corporate or corporation includes
- a company incorporated under this Act or company law;
- a company incorporated outside Pakistan, or
- a body corporate declared as body corporate in the relevant statute

but does not include
- A** co-operative society** registered under any law relating to the registration of cooperative societies; or

  • Any other entity, not being a company as defined in this Act or any other law for the time being which the concerned Minister of the Federal Government may, by notification, specify in this behalf.
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5
Q

Foreign company [5]

A

Means any company or body corporate incorporated outside Pakistan, which:

  • has a place of business or liaison office in Pakistan
  • whether by itself or through an agent,
  • physically or through electronic mode; or
  • conducts any business activity in Pakistan in any other manner as may be specified.
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6
Q

Companies limited by shares

A

Liability of its members is limited by the memorandum to the extent of amount, if any, remaining unpaid on the shares respectively held by them.

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7
Q

Companies limited by guarantee (3)

A

Liability of owners is limited to the amount member guarantees to contribute in the event that the company goes into liquidation:

  • The company may or may not have share capital
  • If Company has share capital; Liability shall also include amount unpaid on shares (if any)
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8
Q

Unlimited companies (1)

A

This has all advantages of a normal company except that, liability of its members is not limited

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9
Q

Private Company: Single Member (2)

A
  • consists of a single member who is director of the company.
  • [In these companies (SMC-PVT) Limited is added to the name]
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10
Q

Private Company: Other (4)

A

Company can be registered by at least two members and it restricts:

  • Maximum number of members to 50
    (members jointly holding shares shall be counted as 1 member)
  • Right to transfer the shares by its members (save as otherwise provided in act),
  • Invitation of subscriptions from general public for its shares debentures or Redeemable capital.
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11
Q

Public sector company [8]

A

A company:
- whether public or private
- which is directly or indirectly controlled
- beneficially owned
- or not less than 51% of the voting securities or voting power of which are held
by Government or any agency of the Government or a statutory body

OR
- in respect of which the Government or any agency of the Government or a statutory body
- has otherwise power to elect, nominate or appoint majority of its directors

AND
- includes a public sector association not for profit, licenced by the SECP

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12
Q

Subsidiary company (2) + Notes

A

In relation to any other (holding) company, it means company in which the holding company:

  • Holds the Composition of the Board; or
  • Exercise or controls more than one-half of its voting securities either by itself or together with one or more of its subsidiary companies

Notes
- Subsidiary of a subsidiary company would also be considered subsidiary company of the main holding company
- Composition of board is normally controlled by another company if it can appoint or remove all or a majority of directors (by exercise of power available to it)

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13
Q

SECP (7)

A
  • operationalized on 1st January 1999.
  • replaced Corporate Law Authority
  • head office is at Federal Capital, Islamabad
  • 8 regional offices: Isb, Quetta, Khi, Multan, Lhr, Peshawar, Fsd, Suk
  • has been given lot of powers under Companies Act
  • regulate the affairs of Companies, Insurance Companies, Banking Companies, Modarbas & Non-Banking Finance Companies
  • also empowered by SECP Act, 1997 to exercise many powers and functions.
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14
Q

Registrar (8)

A

Means
- a registrar
- an additional registrar
- an additional joint registrar
- a joint registrar
- a deputy registrar
- an assistant registrar
- or such other officer as may be designated by SECP
performing duties and functions under this Act.

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15
Q

Registrar: Powers and duties (7)

A
  1. Registration of companies
  2. Receiving various documents under the Act
  3. Keeps track of company routine documents
  4. He keeps the record of mortgages and charges
  5. Can call the officers of company for information and explanations
  6. Empowered to inspect the books and records of the company.
  7. May seize the books and records, if think necessary
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16
Q

ASSOCIATION NOT FOR PROFIT: Conditions [5]

A
  1. Association fulfills purposes
  2. It shall apply its profits (if any) in promoting its objects
  3. It shall prohibit the payment of any dividend to its members
  4. Its objects and activities are not and shall not, at any time, be against the laws, public order, security, sovereignty and national interests of Pakistan
  5. SECP shall grant license on such conditions and subject to such regulations as it thinks fit.
17
Q

Purposes of Association not for profit (11+1)

CAR SHER SESCA

A
  • Commerce
  • Arts
  • Religion
  • Science
  • Health,
  • Education,
  • Research,
  • Sports
  • Environment Protection
  • Social Welfare
  • Charity
  • Any other useful object
18
Q

What privilege ANFP can’t enjoy? (2)

A
  1. Association shall enjoy** all privileges of a limited company** and be subject to all its obligations,
  2. except using the ending word(s) “Limited” or “(Guarantee) Limited”
19
Q

Conditions for Revocation of the NPO Licence [9]

A
  1. failed to comply with terms or conditions of license
  2. any requirement of this section/regulations is not met
  3. affairs are prejudicial to public interest
  4. co. has made default in filing F/S to registrar for last 2 FYs
  5. acted against the interest, sovereignity and integrity of Pakistan, security of state, and friendly foreign states
  6. Number of members goes below 3
  7. Company is involved in inappropriate activities (same as chp12)+terrorist financing and money laundering
  8. Not in operation for 1 year
  9. it is just and equitable that license is revoked
20
Q

Effect of Revocation of License [7+2+1]

A
  1. stop all activities except the recovery of money owed to co.
  2. not solicit or receive donations from any source
  3. All the net assets of the company shall be transferred to another company licensed u/s 42 W90D of revocation or extended period
  4. A reasonable amount may be retained by the co. for meeting expenses of vol winding up or registration to registrar for striking off its name.
  5. After such transfer, the members and officers of the first company or any of their family members shall not be eligible to hold any office in later company for next 5 years.
  6. After compliance of above, BOD shall file W15 days, a report to registrar containing information/documents as may be specified.
  7. W30 Days of acceptance of report by registrar, BOD shall:
    - initiate proceedings of vol winding up/ or
    - make application to registrar for striking off its name

If requirements not complied with on a timely basis; SECP may appoint an administrator to manage affairs of company and initiate proceedings for winding up

21
Q

Obligation to register certain associations, partnerships as companies (Sec 9) [3]

A
  1. No association, partnership or entity of more than 20 persons shall be formed for carrying on any business (for gain)
  2. without registration as company under the Companies Act 2017
  3. Penalty = Level 1 + personally liable for all liabilities incurred
22
Q

Exceptions to get registered if members are more than 20. [4]

A
  1. Any society, body or association, other than a partnership, formed or incorporated under any other Pakistan law
  2. A joint family carrying on joint family business
  3. A partnership of two or more joint families (total members of such families, excluding minors, does not exceed twenty)
  4. A partnership formed to carry on practice as lawyers, accountants or any other profession where practice as limited liability Co not permitted under relevant laws / regulations
23
Q

SMC, in case of death of the subcriber to MOA [2]

A

Subscriber to MOA shall nominate a person who in the event of death of the sole member shall be responsible to:
1. Transfer the shares to legal heirs subject to succession under Islamic law of inheritance/respective law
2. Manage the affairs of company as a trustee, till such time the title of shares are transferred.

If transfer is made to more than 1 legal heir, company shall cease to be a SMC and shall follow the process of conversion to a private company.

24
Q

Steps of Incorporation [4]

A
  1. Getting availability of suitable name from registrar
  2. Preparing MOA and AOA with supporting documents
  3. Filing documents (along with application for registration) with registrar
  4. Obtaining the “certificate of incorporation” of company
25
Q

Registration of MOA and AOA [3+4]

A
  1. A declaration of compliance (of reqs) shall also be filed with MOA & AOA
  2. Registrar shall register only if, co. is formed for lawful purpose + all requirements have been complied with
  3. If registrar thinks any doc/info is contrary to law or incomplete
    a) He may require revised docs or remove deficiencies within specified period
    b) if applicant fails to do so, registrar shall refuse the registration of co.
    c) co. could file an appeal to SECP W30D
    d) order of SECP = final
26
Q

Certificate of Incorporation [1+4]

signed by whom, and particulars

A
  1. Registrar shall issue certificate of registration signed by him.
  2. The certificate of incorporation shall state:
    i) name and registration no.
    ii) date of incorporation
    iii) whether public or private
    iv) whether limited(shares/guarantee) or unlimited
27
Q

Effect of registration of a company [5]

A
  1. Subscribers to MOA and subsequent members are body corporate by the name stated in the certificate of incorporation;
  2. capable of exercising all the functions of an incorporated company, having perpetual succession
  3. Status and registered office are as stated in application
  4. Subscribers become holders of **initial shares **(if applicable)
  5. Persons named in AOA as proposed directors are appointed.
28
Q

Liability for carrying on business with less minimum members [3]

A
  1. If number of members of a company is reduced below minimum number of members
  2. company carries on business for more than 180 days while
  3. every member during the time after those 180 days shall be severally liable for payment of whole debts of company contracted during that time [knowledge of the fact]

Company Law (15 decks)

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