Chapter-1-Introduction-to-Company Flashcards
What is a feature of a company related to legal status?
A company has a separate legal status, which means it can enter contracts, own assets, and is liable for its own debts.
What is share capital in a company?
Share capital consists of shares that have rights and are transferable.
What does separation of ownership from management mean?
It means that the ownership of the company is distinct from its management.
What is limited liability of members?
Members’ liability is limited by shares (up to the unpaid amount) or by guarantee (up to the amount agreed to contribute).
What is a legal obligation of a company?
A company has a legal obligation to comply with laws and regulations.
What tax-related obligation does a company have?
A company is liable to pay tax.
What is perpetual succession?
Perpetual succession means that a company continues to exist independently of its members.
What are the two main classifications of companies by status?
Companies can be classified as Private Companies and Public Companies.
What is a Private Company?
A Private Company limits the number of members to 50, restricts share transfers, and prohibits public invitations.
What is a Public Company?
A Public Company is one that is not a private company and can be either unlisted or listed.
What are the types of companies classified by liability?
Companies can be Limited by Shares, Limited by Guarantee, or Unlimited.
What is a Holding Company?
A Holding Company holds more than one-half of voting securities and controls the composition of the Board.
What is a Subsidiary Company?
A Subsidiary Company is one where another company holds more than half of its shares.
What is an Association Not for Profit?
An Association Not for Profit is a company formed for useful social objects and prohibits dividends.
What is a Foreign Company?
A Foreign Company is incorporated outside Pakistan and conducts business or has a place of business in Pakistan.
What is a Body Corporate?
A Body Corporate includes companies incorporated under Company Law and those registered under other laws.
What are the conditions for registration of an Association Not for Profit?
It must be formed for useful social objects, not against the law, prohibit dividends, and apply profits to promote objects.
What are the privileges of an Association Not for Profit?
It enjoys limited liability without the words ‘Limited’ or ‘Guarantee Limited’.
What are the conditions for revocation of an Association Not for Profit?
Conditions include non-compliance with laws, having less than 3 members, or involvement in fraud.
What is the effect of revocation of an Association Not for Profit?
Operations must stop, net assets must be transferred within 90 days, and winding up must start within 30 days.
What is the process for reservation of a company name?
The Registrar reserves the name for 60 days, and an appeal can be made to the Commission within 30 days.
What is the effect of registration of a company?
The company becomes a Body Corporate with separate legal status, perpetual succession, and a common seal.
What happens if registration is refused?
The applicant must remove defects or file an appeal to the Commission within 30 days.
