Chapter 1 (Features of a Company) Flashcards
What are the features of a company?
- Separate Legal Status: Contracts with its own name, owns assets, liable for its debts.
- Share Capital: Shares have rights and are transferable.
- Separation of Ownership from Management.
- Limited Liability of Members:
a. Limited by shares (up to unpaid amount of shares).
b. Limited by guarantee (up to the amount agreed to contribute). - Legal Obligation.
- Liability to Pay Tax.
- Perpetual Succession.
What are the types of companies by status?
- Private Company:
a. Limits number of members to 50.
b. Restricts the right to transfer its shares.
c. Prohibits invitation to the general public.
d. Can be either SMC or other than SMC. - Public Company:
a. A company that is not a private company.
b. Can be either unlisted or listed.
What are the types of companies by liability?
- Limited by Shares: Liability limited up to the unpaid amount of shares.
- Limited by Guarantee: Liability limited up to the amount agreed to contribute on winding up.
- Unlimited Company: Liability of members is unlimited.
What are other types of companies?
- Holding Company: Holds more than one-half voting securities or controls the composition of the board (i.e.
appoints or removes all or majority of
directors) - Subsidiary Company: Opposite of a holding company.
- Wholly Owned Subsidiary: 100% shares owned by another company.
- Public Sector Company:
a. If Govt. holds more than one-half shares,
or can appoint majority of directors.
b. it includes public sector ANFP
c. it does not include nomination of directors by Commission - Foreign Company: Incorporated outside Pakistan but conducts business or has a place of business in Pakistan.
What is meant by a Body Corporate
Body Corporate: Includes a company under Company Law, registered under other laws, or incorporated outside Pakistan but excludes cooperative societies and specific bodies by the government.
What are the external and internal authorities in a company?
A. External:
1. Registrar: Reserves name, registers MOA/AOA, issues certificates, receives notices, and investigates.
2. Commission: Registers Association Not for Profit, approves alterations, registers prospectus, and extends AGM time.
B. Internal:
1. Members (Subscribers, Shareholders, Guarantors).
2. Directors.
What are the types of resolutions?
- Ordinary Resolution: Simple majority of present members.
- Special Resolution: 3/4th majority of present members with 21 days’ notice.
What role does the court play in company matters?
The court may cancel elections of directors, variations in shareholders’ rights, and general meetings or their proceedings.
What are the conditions for registration of an Association Not for Profit?
- Formed for useful social objectives.
- Objects/activities are not against the law or Pakistan.
- Prohibits dividends and applies profits to promoting objects.
- MOA/AOA as per the specified form.
- Additional conditions by the Commission (if any).
What privileges does an Association Not for Profit have?
Limited liability without words “Limited” or “Guarantee Limited.”
What are the conditions for revocation of registration?
- Non-compliance with conditions.
- Acts against the law or public interest.
- Failure to file financial statements or annual returns for two consecutive years.
- Number of members falls below three.
- Fraud, money laundering, improper books, or no business for a year.
- Just and equitable cause.
(However Notice + Hearing by Commission.)
What are the effects of revocation?
- Stop operations (except recovery).
- Stop donations.
- Transfer net assets to another company within 90 days.
- Report to Registrar within 15 days of the transfer.
- Start winding up within 30 days of Registrar’s acceptance of the report.
- Members/Officers are prohibited from holding office in the transferee company for five years.
(Commission may appoint Administrator, if non-compliance.)
What is the process for reserving a name?
- Registrar reserves the name for 60 days.
- Appeal to the Commission within 30 days if rejected.
What are the conditions for registration of a company?
- File MOA, AOA, and address.
- File a declaration of compliance.
What happens if registration is approved?
Registrar issues a Certificate of Incorporation stating Name, Registration Number, Date, Status, and Liability.
